REVENUE REGULATIONS NO. 5-2005

SUBJECT : Monthly Submission of Sales Report and other Information Generated by Cash Register Machines (CRMs) and Point of Sales Machines (POS) and/or any Machine Sales Generating Receipt/Invoice Registered with the BIR

TO : All Internal Revenue Officials and Employees and Others Concerned

1.0 BACKGROUND

A priority area of tax administration reform and modernization is the effective supervision and control of the issuance of receipts / invoices by a business establishment, whether through a manual process or through the use of CRMs, POS and similar machines.

The results of the nationwide Tax Compliance Verification Drives (TCVD) disclosed many machines/systems in use are non-compliant with the minimum requirements while a significant number are not even registered with the Bureau in violation of existing rules, orders and circulars. On the otherhand, some establishment visited complained of lack of clarity on the requirements of the Bureau for machines/systems as well as difficulty in complying with the registration requirements.

Accordingly, Revenue Regulations (RR) No. 11-2004 was issued allowing businesses to immediately make use of their CRMs/POS machines without prior authorization/permit from the BIR when the model/brand of the machine is among those accredited with the Bureau. What the owner/user simply needs to do is to register the machine(s) with the Bureau, in accordance with duly established registration procedures. Such registration may also be performed by the supplier of the machine, in behalf of the owner/user/taxpayer. Existing machines/systems with duly issued Permits but are not compliant with the minimum requirement of RR 11-2004 must endeavor to comply at earliest possible time.

In this regard, these Regulations are being promulgated in accordance with the provisions of Section 244 (in relation to Section 237 of the National Internal Revenue Code, as amended), Section 3 of RR No. 10-99, and as a supplemental Regulations to RR No. 11-2004 (which defines the minimum requirements for CRMs/POS and their accreditation/registration) and to allow a selective implementation of the TCVD since those business complying with these two RR’s can be exempted from the visitation.

2.0 COVERAGE

The policies, guidelines and reportorial requirements prescribed in these Regulations to all CRMs/POS machines, or any sales generating receipt/invoice machine classified as “stand alone” or linked to a Computerized System, including units used for training purposes, as well as back up and handheld machines that are used in business whether or not registered pursuant to RR No. 11-2004.

3.0 DEFINITION OF TERMS.

For purposes of these Regulations, the terms herein provided are defined as follows:

3.1 Monthly Sales – gross monthly sales per machine, as stored in the machine’s non-volatile memory

3.2 Stand-Alone Machines – machines that can run independently and have the capability to store information from a non-volatile memory installed inside the machine.

3.3 Machine Identification Number (MIN) – the unique, system-generated control number issued by the BIR to the taxpayer through its Electronic Sales Reporting System (eSales), to acknowledge the enrollment of the machine into the facility. The MIN is issued to every machine enrolled into the eSales, and shall serve as the permanent identification number which the taxpayer shall cite in reporting his monthly sales from the enrolled machine.

3.4 Short Messaging System (SMS) – an electronic communications service for sending short text messages using mobile phones.

3.5 Electronic Mail (e-mail) – the transmission of messages using electronic files over the communication networks. This mode of transmission is efficient for transactions with voluminous information where files are submitted as an attachment.

3.6 Portal Facility – a secured web on-line single sign-on service facility where taxpayers with Internet access can lodge their enrollment and sales report.

3.7 Cloned Machine – a computer or device that functions exactly like another, better-known product. A machine without a specific/known brand.

3.8 Sales Report Number (SRN) – a system-generated number issued to taxpayers to confirm receipt of the sales report.

3.9 Roving Machine – CRM/POS machines controlled and managed by the Head Office and are transferred for use in any branch, as needed.


4.0 GENERAL PROVISIONS.

All business establishments are duty bound to submit on or before the 10th day of the month for each CRM/POS, the gross sales recorded at the end of the prior month and other information described in 4.2. Unless exempted for meritorious reason, business establishments must report thru any of the electronic channels described in 4.3. This means enrolling in the eSales following the procedure in 4.1.

4.1 ENROLLMENT FOR ELECTRONIC REPORTING (eSales).
Enrollment is necessary to obtain Machine Identification Number (MIN) for each CRM/POS machine for which monthly sales report is to be made. The MIN is needed to be able to report as required in 4.2.1.

Business establishments must enroll on or before March 10, 2005 thru any of the alternative channels described below:

In enrolling, taxpayers shall provide the following information:
• 12-Digit Taxpayer Identification Number (TIN-Branch Code)
• Serial Number of the POS or CRM Machine as provided by the manufacturer or supplier of the machine and for cloned machines, the software license number shall be used.
• BIR issued Permit Number
• Permanent E-mail Address (for e-mail or Portal users only)

Data requirements will be the same regardless of the chosen channel.

The BIR-eSales shall generate an MIN, which will serve as the permanent transaction number of each machine. This number is the unique identifier that shall be used by the taxpayer for purposes of reporting their monthly sales.

4.1.1 SMS Enrollment Format
Type
CRMREG** where:

• TIN is the 12-Digit Taxpayer Identification Number

• SN is the Serial Number of the Machine
! For POS, Serial Number shall refer to the Server Serial Number
! For Software Solutions, Serial Number shall refer to the Software License Number
! For HW/SW bundled solutions, Serial number of the machine shall prevail

• PN is the Permit Number issued by BIR

4.1.2 E-mail Enrollment Procedure

Only one permanent email address shall be used for CRM/POS Enrollment and Sales Reporting. The taxpayer shall download from the BIR Portal the Excel file format (labeled CRM REG) which the taxpayer shall fill-out and send as a file attachment of the e-mail submission.
SEND:
To : crmpos@bir.gov.ph
From : taxpayer@company.com.ph
Subject : CRM REG
Attachment: CRMReg(Name of Company).csv

4.1.3 Portal Enrollment Procedure Only registered BIR Portal users can enter the CRM/POS Enrollment and Sales Reporting application. The Electronic Sales Reporting System (eSales) Home Page welcomes the user to the eSales. It contains the following links:
(1) Enroll Machine
(2) Report Sales
(3) View/Update Sales Report
(4) FAQ
(5) Logout to the System

A separate issuance will be issued to provide for detailed procedures and processes for enrollment.

4.2 REPORTING OF MONTHLY SALES. All business establishments with CRM/POS are duly bound to submit a monthly report for each CRM/POS as follows:

4.2.1 Data to be Reported
The Sales Report shall contain the following:

• MIN issued by the system at the time of enrollment

• Gross Monthly Sales (sales subject to VAT and Non-VAT) per machine as stored in the machine’s non-volatile memory.

The breakdown of sales as to VAT and Non-VAT is required only when the same machine is used for VAT and Non-VAT transactions, and is capable of segregation. Otherwise, whatever is reflected in the machine as the monthly sales total shall be reported.

• The Month of the sales period being reported

• Serial number of the last Official Receipt/Invoice number issued for the month being reported

The mobile number/e-mail address used in the initial transaction (enrollment or first sales report submitted) will be considered as the permanent/default number/address of the taxpayer. In case of difference in the address from the e-mail against the Portal submitted address, the e-mail address used in reporting/enrolling shall prevail.

4.2.2 Machine with Zero Sales

All machines enrolled in the system with or without sales data shall be reported as prescribed in these Regulations unless cancelled.

4.2.3 Date of Reporting

The monthly sales per machine, shall be reported on or before the 10th calendar day of the following month using any of the required channels as described in Section 4.3.

4.2.4 Alternative Channels of Reporting

Taxpayers can choose from among the following channels of enrollment and sales reporting:

• Short Messaging System (SMS)

• Electronic Mail (e-mail)

• BIR Portal

4.2.5 Acknowledgement

A Sales Report Number (SRN) shall be issued by the system as a proof that BIR has received your sales report.

4.3 SALES REPORTING PROCEDURE

4.3.1 SMS Procedure

Business establishments with three or less machines are the ideal users of this facility.

Type :
CRMSALES** where:

! MIN is the Machine Identification Number issued by the eSales

! MON_SALES refers to the sales transaction of the Month being reported and the amount of sales for the month. It shall follow the format
Month digit=amount of sales, Where :
Month digit = 1 for January, 2 for February and so on
Amount of sales = Gross amount of sales for the month being reported

Example :
Sales report for the of March amounted to P800,000.00
shall be reported as :
3=800000.00

! ER is the Last Official Receipt number issued for the month

In cases of multiple submissions, the most recent record submitted within month of sales reporting shall be considered as the final sales report. A corresponding Sales Report Number (SRN) will be issued to each reporting transaction which will uniquely identify each report.

4.3.2 E-mail Procedure

Only one permanent email address shall be used for CRM/POS Enrollment and Sales Reporting. The taxpayer shall download from the BIR Portal the Excel file format (labeled CRM SALES) which the taxpayer shall fill-out and send as a file attachment of the e-mail submission.
SEND:
To : crmpos@bir.gov.ph
From : taxpayer@company.com.ph
SUBJECT : CRM SALES
Attachment : CRMSales(Name of Company).csv
4.3.3 BIR Portal

Only registered BIR Portal users can enter the CRM/POS Enrollment and Sales Reporting application. Detailed procedure and system guide is published at the BIR Portal (www.my.bir.gov.ph).

The Electronic Sales Reporting System (eSales) Home Page welcomes the user to the eSales. It contains the following links:
(1) Enroll Machine
(2) Report Sales
(3) View/Update Sales Report
(4) FAQ
(5) Logout to the System

Taxpayers can request reports to esales@bir.gov.ph for the summary of their submitted monthly sales.

4.3.4 Manual Submission

Businesses shall endeavor to get themselves into any of the three (3) electronic channels above described. Should for meritorious reason an establishment is unable to report electronically, they may be allowed to make the report to the BIR Call Center in order that the electronic submission can be effected thereat.

A separate issuance will be issued to provide for detailed procedures and processes.

5.0 ROVING MACHINES

The sales generated from the roving machines are accounted for and shall be reported by the branch where the machine is used. Enrollment into the system shall be made prior to the use of the CRM/POS.

Once the roving machine has been used/enrolled by the branch into the system, a monthly sales report (with or without sales) shall be submitted unless cancelled.

6.0 REPLACEMENT OF LOST MACHINE IDENTIFICATION NUMBER (MIN)

In case the taxpayer forgets or misplaces the issued MIN(s), the taxpayer shall obtain the MIN through the BIR Contact Center at 981-8888.

7.0 CANCELLATION OF REGISTRATION.

The facility to cancel registration/enrollment of the POS/CRM/any sales machine will only be available in the BIR Portal. Cancellation of enrollment are only applicable to retired machines/software or those permanently transferring ownership from one taxpayer to another taxpayer.

8.0 PENALTY.

Any violation of the provisions of these Regulations shall be considered as sufficient grounds for the revocation of the taxpayer’s permit to use CRM or POS machine and shall subject the concerned taxpayer to the penalty provided under Section 250 of the 1997 NIRC, as amended.

For this purpose, failure to submit sales report per machine shall constitute one failure.

Payment of penalty does not relieve the taxpayer from the submission of the monthly sales report. TCVD and other enforcement measure maybe be undertaken to compel taxpayer to fully comply with the Regulation.

9.0 TRANSITORY PROVISIONS.

During the transition period, the following guidelines shall be followed:

9.1 Registration Update – Establishments who failed to register the POS/CRM/Sales Receipt generating machine shall update their corresponding registration records with the concerned RDOs. An update of registration shall also apply to establishment who has not reported cancelled or abandoned sales generating receipt machines.

9.2 Sales Report Update - The January and February sales report shall be submitted as distinct and separate reports on or before March 10, 2005.

10.0 REPEALING CLAUSE.

Any revenue issuance inconsistent herewith is hereby amended, revoked, modified or repealed accordingly.

11.0 EFFECTIVITY CLAUSE.

These Regulations shall be effective after 15 days following publication in the newspaper of general circulation.

(Original Signed)
CESAR V. PURISIMA
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue

REVENUE REGULATIONS NO. 4-2005

NOTE: Amended in RR 13-2006


SUBJECT : Rules and Regulations Implementing Bangko Sentral ng Pilipinas (BSP) Circular No. 472 Series 2005 Section 1 requiring all bank borrowers and comakers to submit latest Income Tax Return (ITR), and Financial Statement (FS) received by BIR.

TO : All Internal Revenue Officers and Others Concerned

1.0 Background
Section 1 of BSP Revised Circular No. 472 Series 2005 amending Subsection X304 of the Manual Regulations for Banks (MORB) provides among others:

1.1 In addition to the usual information sheet about the borrower, banks and financial institutions shall require from the credit applicant a statement of his assets and liabilities and of his income and expenses together with the following:

1.1.1 A copy of the latest Income Tax Return (ITR) of the borrower, co-maker, endorser, surety and/or guarantor, if applicable, duly stamped as received by the Bureau of Internal Revenue (BIR);

1.1.2 Except as otherwise provided by law and other regulations, if the borrower is engaged in business, a copy of the borrower’s latest financial statements as submitted for taxation purposes to BIR;

1.1.3 A waiver of confidentiality of client information and/or an authority of the bank to conduct random verification with the BIR in order to establish the authenticity of the ITR and accompanying financial statements submitted by the client.

1.2 The consistency of the data/ figures in said ITR and statements shall also be checked and considered in the evaluation of the financial capacity and creditworthiness of credit applicants and co-makers.

2.0 Objectives

2.1 Provide a System through which banks can faithfully discharge their responsibility under Revised Circular 472-2005 and ensure that only tax compliant applicants are allowed to apply for credit, act as co-maker, endorser, surety and/or guarantor.

2.2 Provide a simple, systematic and convenient way by which tax compliant applicants can obtain the required documents and comply with the submission requirements of BSP Circular No. 472 Series 2005 Section 1.

2.3 Ensure the authenticity of the Income Tax Return and accompanying financial statements or other documents submitted by the credit applicants and comakers.

3.0 Definitions

3.1 Electronic Filing and Payment System (EFPS)
The internet-based system of BIR for the paperless filing of tax returns, the payment of taxes due thereon, and the submission of information such as Financial Statements, Balance Sheets and Summary Lists of Sales and Purchases, etc. This system is available through the BIR Portal www.my.bir.gov.ph.

3.2 Latest Income Tax Return (ITR)
For participants already with an Annual ITR, latest ITR shall refer to the ITR for the preceding Tax Year be it on a calendar or fiscal year. For new establishments which, therefore, have no annual ITRs yet, it shall refer to the most recent quarter’s ITR.

3.3 Financial Statements (FS)
Financial Statements shall include the balance sheet, the statement of income, statement of changes in equity, and the statement of cash flows, together with all notes to the statements.

Starting 2005 and for taxpayers with total assets of more than 15 Million, only financial statements audited by external auditors accredited by the Securities and Exchange Commission (SEC) shall be acceptable.

4.0 General Provisions

4.1 EFPS Filing of ITR to Facilitate Loan Evaluation

4.1.1 To facilitate the bank’s ITR and FS verification as required under the circular, all prospective credit applicants and co-makers are strongly advised to file their income and financial statement and other information required electronically using the Electronic Filing and Payment System (EFPS).

4.1.2 A copy of the EFPS-filed ITR may be downloaded from the BIR Portal by the applicant while the bank may verify its authenticity following the process in 4.2.1 below

4.1.3 Returns filed with AABs or thru EFPS with corresponding reference number shall be deemed duly stamped and received by the BIR

4.2 Procedure for Authenticating ITRs of the credit applicants and co-makers

4.2.1 EFPS-generated or printed Income Tax Returns, must be checked for authenticity either by telephone to the BIR Contact Center Tel 981-8888 or through the BIR Portal.

4.2.2 For Non-EFPS tax returns, a copy of the tax return must be faxed to BIR Contact Center with a covering letter-request stating the name of the bank, the contact person, the bank’s telephone number and/or fax number, the applicant’s/ co-maker’s name and TIN, his/her telephone/fax numbers. The Center will handle the verification to the Region/district concerned and will respond to the requesting bank accordingly.

4.3 Procedure for Authenticating Financial Statements

Supporting FS are required to be presented to a Revenue District Office after filing and paying either thru EFPS or manually thru the AAB’s for stamping.

To verify the authenticity of FS presented to support loan applications, banks must fax a Authenticity Verification Request to the BIR Contact Center (Tel 981-8888) attaching thereto the FS to be verified. The fax request must contain the following information: bank name, contact person, fax number, telephone number, name and TIN of credit applicant and total revenues in FS.

5.0 Effectivity

These regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation.

(Original Signed)
CESAR V. PURISIMA
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue

REVENUE REGULATIONS NO. 3-2005

SUBJECT : Rules and Regulations Implementing Executive Order No. 398 (EO 398) and Requiring Timely and Complete Payment of Taxes as a Precondition for Entering Into and as a Continuing Obligation in Contracts with Government

TO : All Internal Revenue Officers and Others Concerned

1.0 Objectives

1.1 Ensure that only tax compliant entities are allowed to enter into contracts with government, its departments, agencies and instrumentalities for the supply of goods and services.

1.2 Provide a simple and convenient way by which tax compliant applicants can obtain the required documents and comply with the submission requirements of EO 398.

2.0 General Provisions

2.1 Latest Tax Returns as Pre-Condition for Participation.

2.1.1 EO 398 provides. - "All persons, natural or juridical, local or foreign, desiring to enter into or participate in any contract with the government, its departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units shall, as a pre-condition, submit, along with their proposal and/or bid, a copy of their latest income tax and business tax returns."

2.1.2 The above returns must be duly stamped and received by BIR and duly validated with the tax payments made thereon except in cases provided for in 4.2.2 below.

2.1.3 Returns filed with AABs or thru EFPS with corresponding reference numbers shall be deemed duly stamped and received by the Bureau of Internal Revenue (BIR).

2.2 Tax Clearance

Also part of the submission for the bid/offer to be accepted for evaluation is the Tax Clearance from the BIR described in 3.4, 4.4 and 4.5 below.

2.3 Summary List of Contracts and Payments Made to Contractors EO 398 provides. - “All departments, bureaus, offices and agencies, including state universities and colleges, government-owned and/or controlled corporations, government financial institutions and local government units, shall regularly furnish the Bureau of Internal Revenue with the names of private contracting parties that they have contracted with, as well as the amount of payments made to these private contracting parties, to enable the Bureau of Internal Revenue to scrutinize full and timely payment of taxes.”

To comply with the above, the concerned entities must submit via EFPS BIR Form 1600 (a copy of which is attached herewith and made an integral part of these Revenue Regulations), with the Alphabetical list of Payees completely filled up for all contracts for the period of the report.

3.0 Definitions

3.1 Electronic Filing and Payment System (EFPS) The internet-based system of the BIR for the paperless filing of tax returns, the payment of taxes due thereon, and the submission of information such as Summary List of Sales and Purchases. This system is available through the BIR Portal.

3.2 Latest Income Tax Return (ITR)
For participants already with an Annual ITR, latest ITR shall refer to the ITR for the preceding Tax Year be it on a calendar or fiscal year. For new establishments which, therefore, have no annual ITR yet, it shall refer to the most recent quarter’s ITR.

3.3 Latest Business Tax Return
Refers to the Value Added Tax (VAT) or Percentage tax returns covering the previous six (6) months. For those with less than six (6) months of operations, this refers to the monthly business tax returns filed to date.

3.4 Tax Clearance
Refers to the clearance issued by the Collection Enforcement Division (CED) attesting that the taxpayer has no outstanding Final Assessment Notice and/or delinquent account.

4.0 Specific Provisions

4.1 Mandatory EFPS Filing
Effective 1 April 2005, all prospective participants to any government procurement of goods and services are mandated to file their income and business tax returns and other required information electronically using the Electronic Filing and Payment System (EFPS).

4.2 Acceptable Tax Return Submissions for Participation in Government Procurement

4.2.1 Effective 1 May 2005, only tax returns filed thru EFPS will be accepted as the required submission under Section 1 of EO 398.

4.2.2 Interim Procedure.- From the date of effectivity of these Regulations up to April 30, 2005, Non-EFPS filed tax returns and payment documents may be submitted as compliance to para 2.1. Provided that these documents must first be presented to the Revenue District Office with jurisdiction over the taxpayer for authenticity check and stamping.

4.3 Processing of the Tax Return by the Procuring Government Entity

4.3.1 For EFPS generated or printed Tax Returns, the documents must be checked for authenticity either by telephone with the BIR Contact Center Tel 981-8888 or through the BIR Portal www.my.bir.gov.ph.

4.3.2 For those submitted under Section 4.2.2, copies of the Non-EFPS generated tax return must be faxed to BIR Contact Center with a covering letter stating the name of the procuring government agency, the name of the responsible procurement officer, and such officer’s telephone/fax numbers.

4.4 Tax Clearance

4.4.1 Requests for Tax Clearance by the bidding taxpayers must be in writing and contain the following information: the name of the taxpayer requesting the tax clearance, its tel/fax number, its taxpayer identification number (TIN), the revenue district office with jurisdiction over the taxpayer, .the name of the Procuring Government Agency, the name of the responsible procurement officer, and his tel/fax number.

4.4.2 The application must be addressed to the Division Head, Collection Enforcement Division, BIR National Office Telefax 928-7466.

4.5 Processing of Tax Clearance by Procuring Government Agency A Tax Clearance obtained under paragraph 4.4 above must be verified for authenticity by telephone with the BIR Contact Center or through the BIR Portal which will have an updated list of participating firms with Tax Clearances.

5.0 These regulations shall take effect fifteen (15) days after publication in any newspaper of general circulation.

(Original Signed)
CESAR V. PURISIMA
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue

REVENUE REGULATIONS NO. 2-2005

NOTE: Amended in RR 11-2005, RR 12-2005 and RR 13-2005

SUBJECT: Consolidated Revenue Regulations Implementing Relevant Provisions of Republic Act No. 7227 otherwise known as “Bases Conversion and Development Act of 1992”, Republic Act 7916 as amended otherwise known as “Special Economic Zone Act of 1995”, Republic Act No. 7903 otherwise known as “Zamboanga City Special Economic Zone Act of 1995” and Republic Act No. 7922 otherwise known as “Cagayan Special Economic Zone Act of 1995” Thereby Amending Revenue Regulations No. 1-95 as amended by Revenue Regulations No. 16-99.

TO: All Internal Revenue Officers and Others Concerned

SECTION 1. Scope. - Pursuant to the provisions of Sections 244 and 245 of the National Internal Revenue Code of 1997 as amended, these regulations are hereby promulgated to implement:

1. Sections 12(b) and 12(c) of Republic Act No. 7227 governing businesses and enterprises within the Subic Special Economic and Freeport Zone (SUBIC-ECOZONE);

2. Sections 23, 24, 26, 50 and 51 of Republic Act No. 7916 governing businesses and enterprises within the Special Economic Zones (ECOZONE);

3. Sections 4(e) and 4(f) of Republic Act No. 7903 governing businesses and enterprises within the Zamboanga City Special Economic Zone (ZAMBO-ECOZONE); and

4. Sections 4(b) and 4(c) of Republic Act No. 7922 governing businesses and enterprises within the Cagayan Special Economic Zone and Free Port (CAGAYAN-ECOZONE)

SECTION 2. Definitions - For purposes of these Regulations the terms used herein shall be construed to have the following meanings:

a. SUBIC-ECOZONE — refers to the Subic Special Economic and Freeport Zone, created under Section 12 of RA No. 7227.

b. SUBIC-ECOZONE Registered Enterprise — refers to any business entity or concern located within the SUBIC-ECOZONE and duly registered with and/or licensed by the SBMA to operate any lawful economic activity within the SUBIC-ECOZONE.

c. SUBIC-ECOZONE Facilities Operator — refers to a SUBICECOZONE Enterprise which operates facilities or services within the SUBIC-ECOZONE, including the subleasing of land or other property to other SUBIC-ECOZONE Enterprise

d. SBMA — refers to the Subic Bay Metropolitan Authority, established and created pursuant to Section 13 of the Republic Act No. 7227

e. ECOZONES or "Special Economic Zones"- shall refer to selected areas with highly developed or which have the potential to be developed into agro-industrial, industrial, tourist, recreational, commercial, banking, investment and financial centers established in accordance with Sec 5 & 6 of Republic Act No. 7916.

f. ECOZONE Registered Enterprise – refers to any business entity or concern within the ECOZONE duly registered with and/or licensed by the PEZA to operate any lawful economic activity within the ECOZONE. An ECOZONE Registered Enterprise may be classified as follows:

f.1 “ECOZONE Export Enterprise” - refers to an individual, association, partnership, corporation or other form of business organization which has been registered with the PEZA to engage in manufacturing, assembling or processing activity falling within the purview of the Act and resulting in the exportation of 100% of its production, unless a lower percentage of its production for exportation is prescribed by the PEZA Board subject to such terms and conditions as the latter may determine.

f.2 “ECOZONE Domestic Market Enterprise” - refers to an individual, association, partnership, corporation or other form of business organization which has been registered with the PEZA to engage in manufacturing, assembling or processing activity falling within the purview of the Act resulting in the sale of its finished products in the customs territory or in the non-restricted or authorized areas within the ECOZONE in its entirety or if exporting a portion of its production output, it continually fails to export at least fifty percent (50%) thereof for a period of three (3) years without any justifiable reason in case at least 60% of its working capital is owned by Philippine nationals or in case more than 40% of its working capital is owned by foreign nationals, it continually fails to export at least seventy percent (70%) of its production output for a period of three (3) years without any justifiable reason.

f.3 “ECOZONE Pioneer Enterprise” - shall mean an ECOZONE enterprise (1) engaged in the manufacture, processing or production and not merely in the assembly or packaging of goods, products, commodities or raw materials that have not been or are not being produced in the Philippines on a commercial scale or (2) which uses a design, formula, scheme, method, process or system of production or transformation of any element, substance or raw materials into another raw material or finished goods which is new and untried in the Philippines or (3) which produces non-conventional fuels or manufactures equipment which utilizes non-conventional sources of energy or uses or converts to coal or other nonconventional fuels or sources of energy in its production, manufacturing or processing operations: or (4) engaged in the pursuit of agri-export processing zone development or (5) given such status under the Investment Priorities Plan:

Provided, That the final product in any of the foregoing instances involves or will involve substantial use and processing of domestic raw materials, whenever available, taking into account the risk and magnitude of investment.

f.4 “ECOZONE Free Trade Enterprise” - refers to an individual, association, partnership, corporation or other form of business organization which has been registered with the PEZA to engage in the importation of goods or merchandise within the restricted or free trade area in the ECOZONE tax and duty-free for immediate transshipment or for storage, repacking, sorting, mixing or manipulation and subsequent exportation unless the Board allows the sale thereof in the customs territory subject to the payment of customs duties and internal revenue taxes and to such other terms and conditions as it may determine.

f.5 “ECOZONE Utilities Enterprise” - shall refer to a business entity or concern within the ECOZONE duly registered with and/or franchised/licensed by the PEZA with or without the incentives provided under Republic Act No. 6957, as amended, (the Build-Operate-Transfer Law) and/or with or without financial exposure on the part of the PEZA, such as contractors/operators of light and power systems, water supply and distribution systems, communications and transportation systems within the ECOZONE and other similar or ancillary activities as may be determined by the PEZA Board.

f.6 “ECOZONE Facilities Enterprise” - shall refer to a business entity or concern within the ECOZONE duly registered with and/or franchised/licensed by the PEZA with or without incentives provided under Republic Act No. 6957, as amended, (the Build-Operate-Transfer Law) and/or with or without financial exposure on the part of the PEZA such as contractors/operators of buildings, structures, warehouses, site development and road network, ports, sewerage and drainage system and other facilities for the development, operation and maintenance of the ECOZONE and other similar or ancillary activities as may be determined by the PEZA Board.

f.7 “ECOZONE Developer/Operator” - refers to a business entity or concern duly registered with and/or licensed by the PEZA to develop, operate and maintain an ECOZONE or any or all of the component IE, EPZ, Free Trade Zone or Tourist/Recreational Center and the required infrastructure facilities and utilities such as light and power system, water supply and distribution system, sewerage and drainage system, pollution control devices, communication facilities, paved road network, administration building and other facilities as may be required by the PEZA.

The term shall include the PEZA and/or the Local Government Unit when by themselves or in joint venture with a qualified private entity, shall act as the Developer/Operator of the ECOZONES. As such, they shall be entitled to the same incentives under Rule XIV of these Rules in accordance with the pertinent provisions of Republic Act No.7916 and the Omnibus Investments Code.

f.8 “ECOZONE Service Enterprise” - shall refer to a business entity or concern within the ECOZONE such as but not limited to those engaged in customs brokerage, trucking/forwarding services, parcel services, janitorial services, security services, insurance, and/or banking services, consultancy services, restaurants or such other services within the ECOZONE as may be determined by the Board, duly registered and/or licensed by the PEZA whose income derived within the ECOZONE shall be subject to taxes under the National Internal Revenue Code pursuant to Section 25 of the Republic Act No. 7916 as amended by Republic Act No. 8748.

f.9 “ECOZONE Tourism Enterprise” - shall refer to an individual, association, partnership, corporation or other business organization duly registered with the PEZA proposing to engage in the establishment and operation of tourist-oriented accommodations, restaurants operated as an integral part of a tourism facility (e.g. hotels, resorts, recreational centers), sports and recreational facilities within the ECOZONE.

g. Restricted Area - shall mean a specific area within the ECOZONE, which has been classified and/or fenced-in as export processing zone, free trade zone or such other similar areas as may be declared by governing Board.

h. PEZA – shall refer to the Philippine Economic Zone Authority i. ZAMBO-ECOZONE – refers to the Zamboanga City Special Economic Zone and Freeport created pursuant to Sec. 3 of the Republic Act No. 7903.

j. ZAMBO-ECOZONE Enterprise — refers to any business entity or concern within the ZAMBOECOZONE, duly registered with and/or licensed by the ZAMBOECOZONE Authority to operate any lawful economic activity within the ZAMBOECOZONE.

k. ZAMBOECOZONE Authority – refers to the Zamboanga City Special Economic Zone Authority created under Sec. 5 of Republic Act No. 7903.

l. CAGAYAN-ECOZONE – refers to the Cagayan Special Economic Zone and Freeport created pursuant to Sec. 3 of the Republic Act No. 7922.

m. CAGAYAN-ECOZONE Enterprise — refers to any business entity or concern within the CAGAYAN-ECOZONE, duly registered with and/or licensed by the CEZA to operate any lawful economic activity within the CAGAYAN-ECOZONE.

n. CEZA – refers to Cagayan Economic Zone Authority created under Sec. 5 of Republic Act No. 7922.

o. Zone – refers to the SUBIC-ECOZONE, ECOZONES, ZAMBOECOZONE or CAGAYAN-ECOZONE, as the context may require.

p. Resident — refers to any individual who is registered and authorized by the SBMA, PEZA, ZAMBOECOZONE Authority or CEZA to establish and maintain a personal residence in the Zone where they are registered.

q. Certificate of Registration — refers to the certificate issued by the SBMA, PEZA, ZAMBO-ECOZONE Authority or CEZA evidencing the registration of the business entity as an Enterprise in the applicable Zone where registered.

r. Certificate of Residency — refers to the certificate issued by the SBMA, PEZA, ZAMBO-ECOZONE Authority or CEZA evidencing the registration of an individual as a Resident of the applicable Zone where registered.

s. Date of Registration – shall refer to the date appearing in the Certificate of Registration or Certificate of Residency

t. Customs — means the Philippine Bureau of Customs

u. Customs Territory — refers to the portion of the Republic of the Philippines outside of SUBIC-ECOZONE, ECOZONE, ZAMBOECOZONE or the CAGAYAN-ECOZONE, as the case maybe.

v. Articles — refers to any goods, wares, merchandise and in general, any thing which under the Tariff and Customs Code of the Philippines or other laws may be made or is the subject of importation or exportation.

w. Domestic Articles — refers to articles which are the growth, produce, or manufacture of the Philippines on which all national internal revenue taxes have been paid, if subject thereto, and upon which no drawback or bounty has been allowed; and articles of foreign origin on which all duties and taxes have been paid and upon which no drawback or bounty has been allowed, or which have previously been entered into Customs Territory free of duties or taxes.

x. Foreign Articles — refers to articles of foreign origin on which duties and taxes have not been paid, or if paid, upon which drawback or a bounty has been allowed, or which have not previously been entered into Customs Territory; or articles which are the growth, produce, or manufacture of the Philippines on which not all national internal revenue taxes have been paid, if subject thereto, or if paid, upon which drawback or a bounty has been allowed.

y. Transshipment — refers to transshipment of articles discharged at ports or airports of entry located in Customs territory destined for delivery and actually delivered to the Zone, and articles coming from the latter intended for export and actually exported thru a Philippine Customs port/airport of entry which may be transported under bond, upon examination, and consigned to the Collector at the port of destination/export who will allow the consignor or consignee, as the case may be, to make entry exportation.

z. Retail Sale — refers to the sale of articles in the Zone, in small quantities to any person, natural or juridical, for his/her/its own personal use and account and not for resale.

aa. Foreign Exchange — shall mean any currency other than the Philippine Peso acceptable for international reserve or authorized for international transaction by the Central Bank of the Philippines.

SECTION 3. National Tax Exemption and Incentives to Zone Registered Enterprises - All ECOZONE-registered enterprises, CAGAYAN-ECOZONE registered enterprises and ZAMBO-ECOZONE registered enterprises who are covered by the special tax regime of 5%, including all SUBIC-ECOZONE registered enterprises doing business within the Zone shall enjoy the following:

a. Exemption from national internal revenue taxes on importations of raw materials for manufacture and actually manufactured into finished products, and capital goods and equipment needed for their business operation, within the Zone. Removal of raw materials, capital goods, equipment and consumer items out of the Zone for sale to non-Zone registered enterprises shall be subject to the usual taxes and duties provided for in Republic Act No. 7227 for SUBIC-ECOZONE.

b. Exemption from the national internal revenue taxes, such as gross receipts tax, VAT, ad valorem and excise taxes on their sales of goods and services for which they shall otherwise have been directly liable, except for local sales as discussed in sub-section f of this Section and unless provided for in other laws to the contrary.

c. Exemption from franchise, common carrier or value added taxes and other percentage taxes on public and service utilities and enterprises within the Zone for services rendered within Zone.

d. Preferential tax treatment on income earned/derived from business operations within the Zone or from foreign sources. However, in the case of telecommunications service, the income of the enterprise within the Zone shall be net of the share of the foreign telecommunications company, and in the case of common carriers by land, air or water, only that portion of the income and expenses for the transport of cargoes and passengers within the Zone shall be covered by the preferential income tax treatment and what is not covered shall be subject to the regular corporate income tax.

e. Purchases from enterprises in the Customs Territory of raw materials forming part of finished goods exported by the Zone registered enterprises shall be considered effectively zero-rated or exempt for VAT purposes depending on the fiscal incentives availed of by the Zone registered enterprise. The application of this rule on VAT will however be covered by a separate Revenue Regulations discussing in particular the VAT implications of transaction within, into and outside the Zone.

f. Zone registered enterprises may generate income from sources within the Customs Territory of but up to Thirty Percent (30%) of its total income from all sources only.

All of the income of Zone registered enterprises generated from sources within the Customs Territory shall be subject to the internal revenue laws of the Customs Territory and the regular internal revenue taxes and rate imposed for enterprises in the Customs Territory.

Provided, however, that in the event SUBIC-ZONE registered enterprises shall generate income from sources within the Customs Territory in excess of thirty percent (30%) of its total income from all sources, all of its income shall be subject to the regular internal revenue tax rate imposed for enterprise in the Customs Territory.

g. Carriers who undertake to transship articles to and/or from the Zone to a Customs Bonded warehouse within the Customs Territory shall be bonded in an amount to be determined by the SBMA, PEZA, ZAMBO-ECOZONE Authority or CEZA and Bureau of Customs which shall not be less than fifty thousand (P50,000) pesos conditioned upon the carrier transporting and delivering without delay, and in accordance with rules and regulations in effect in the Customs Territory, to the Collector of Customs at the port of destination/export.

The provisions of the Tariff and Customs Code, as amended, on transshipment, and its implementing regulations shall govern cases of transshipment for foreign articles to and/or from the Zone.

h. Articles which are manufactured in the Zone and exported therefrom to a foreign country shall, upon subsequent importation into customs territory, be subject to the laws on importation applicable to like articles manufactured in a foreign country.

Business enterprises operating within the Zone, but which are not registered by or accredited with SBMA, PEZA, ZAMBO-ECOZONE Authority or CEZA shall not be entitled to the preferential tax treatment provided for in Section 12(c) of the Republic Act No. 7227; Section 24 of Republic Act No. 7916; Section 4(f) of Republic Act No. 7903; and Section 4(c) of Republic Act No. 7922.

SECTION 4. Tax and Fiscal Obligation - Pursuant to Section 12(c) of the Republic Act No. 7227; Section 24 of Republic Act No. 7916; Section 4(f) of Republic Act No. 7903;
and Section 4(c) of Republic Act No. 7922:

a. Zone registered enterprises doing business within the Zone shall, in lieu of local and national taxes, be liable to the pay 5% of gross income earned, broken down as follows:

RA 7227 Subic-Ecozone	RA 7916 Ecozones	RA 7903 Zambo-Ecozone	RA 7922 Cagayan-Ecozone
(1) 3% to the National Government; (2) 1% to the Local Government units affected by the declaration of the Zone; and (3) 1% to the Special Development Fund to be utilize for the development of municipalities outside the City of Olongapo and the Municipality of Subic and ther municipalities contiguous to the base area	(1) 3% to the National Government; (2) 2% which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located	(1) 2% to the National Government; (2) 2% to the City of Zamboanga; and (3) 1% to the barangay special development fund, which is hereby created, for the development and improvement of the barangays within the City of Zamboanga	(1) 2% to the national government; (2) 1% to the Province of Cagayan; (3) ½% to be shared by municipalities affected by the declaration of the Zone in proportion to their income from business activities within the Zone; and (4) 1 ½% to the CEZA

b. The equivalent amount of tax paid/payable to the National Government of the Philippines shall be considered for purposes of any claim for credit against taxes paid to foreign government by the foreign corporation accredited by the SBMA, PEZA, ZAMBOECOZONE Authority or CEZA to operate within the Zone.

c. Zone registered enterprises operating within the Zone shall be responsible for the safekeeping and accounting of all articles received by them. Articles which are missing or cannot be accounted for in the Zone shall be presumed to have been transferred to the Customs Territory without permit and therefore subject to taxes and duties.

Articles which are found in the Zone but cannot be accounted for in the records of a zone registered enterprise shall be treated as having been received in the Zone without permit and therefore should be reported to the SBMA, PEZA, ZAMBO-ECOZONE Authority or CEZA and the Bureau of Customs.

d. A zone registered enterprise operating within the Zone shall be constituted as withholding agent for the government (1) if it acts as an employer and its employees receive compensation income subject to the withholding tax under Sec. 72 (a), Chapter X, Title II of the NIRC as implemented by Revenue Regulations No. 12-86 as amended, or (ii) if it makes income payments to individuals or corporations subject to the expanded withholding tax pursuant to Sec. 50 (b) of the NIRC, as amended, and as implemented by Revenue Regulations No. 6-85 as amended; or (iii) if it makes payment/remittance of certain income subject to the final withholding tax under Sec. 50 (a) in relation to Sec. 51 of the NIRC.

e. Interest from any Philippine currency bank deposits and yield or any other monetary benefit from deposit substitutes, and from trust fund and similar arrangements received by a zone registered enterprise engaged in business within the Zone shall be subject to the internal revenue taxes under the National Internal Revenue Code as amended.

SECTION 5. Removal or Withdrawal from the Zone to Customs Territory - Notwithstanding the above-mentioned tax and duty exemptions, foreign articles removed, withdrawn or otherwise disposed to the customs territory, shall be subject to the payment of customs duties and internal revenue taxes as ordinary importations in accordance with the provisions of the Tariff and Customs Code of the Philippines, as amended and National Internal Revenue Code and other applicable laws. Articles removed customs territory will be presumed to be foreign unless there is sufficient evidence presented to satisfy Customs officials that they are domestic articles, as defined in these regulations.

SECTION 6. Service Establishments - On income derived service establishments within the Zone, the following rules shall apply:

a) On income derived within ECOZONES: All income derived by persons and by all service establishments rendering their services within the ECOZONES, whether registered or not with PEZA, which may qualify as ECOZONE Service Enterprise as defined herein shall be subject to all internal revenue taxes under the National Internal Revenue Code, as amended.

However, all service establishments registered with the PEZA as ECOZONE locators which export their services or are rendering their services abroad through the use of information technologies shall remain to enjoy the five percent (5%) preferential tax rate under these revenue regulations, provided that such services are paid in foreign currency inwardly remitted through the Banko Sentral ng Pilipinas.

b) On income derived within SUBIC-ECOZONE, ZAMBO-ECOZONE and CAGAYAN-ECOZONE: all income derived by persons shall be subject to withholding taxes under existing tax laws, rules and regulations. All income derived by service establishments within SUBIC-ECOZONE, ZAMBO-ECOZONE and CAGAYANECOZONE shall be subject to the five percent (5%) preferential tax rate, provided that such services are paid in foreign currency inwardly remitted through the Banko Sentral ng Pilipinas.

SECTION 7. Gross income earned – For purposes of the application of these Regulations “gross income earned” shall refer to gross sales or gross revenue derived from registered business activity within the Zone net of sales discounts, sales returns and allowances minus cost of sales or direct costs but before any deductions for administrative, marketing, selling, operating expenses or incidental losses during a given taxable. For financial enterprises, gross income shall include interest income, gains from sales, and other income.

For purposes of computing the total five percent (5%) tax rate imposed by Republic Act No. 7227, Republic Act No. 7903, Republic Act No. 7922 and Republic Act No. 7916, the cost of sales or direct cost shall consist only of the following cost or expense items which shall be computed in accordance with Generally Accepted Accounting Principles (GAAP):

For SUBIC-ECOZONE, ZAMBO-ECOZONE and CAGAYAN-ECOZONE -

1) Trading Enterprises:
- Cost of Sales (Cost of Sales which is equal to Inventory beginning plus purchases minus Inventory of goods ending)

2) Manufacturing enterprises:
- Direct salaries, wages or labor expenses
- Production supervision salaries
- Raw materials used in the manufacture of products
- Decrease in Goods in Process Account (Intermediate goods)
- Decrease in Finished Goods Account
- Supplies and fuels used in production
- Depreciation of machineries and equipment used in production
- Rent and utility charges associated with building, equipment and warehouses used in production
- Financing charges associated with fixed assets used in production the amount of which were not previously capitalized

3) Services enterprises:
- Direct salaries, wages or labor expense
- Service supervision salaries
- Direct materials, supplies used
- Depreciation of machineries equipment used in the rendition of registered services
- Financing charges associated with fixed assets used in the service business the amount of which were not previously capitalized
- Rent and utility charges for buildings and capital equipment used in the rendition of registered services

For ECOZONES under RA No. 7916 -

1. ECOZONE Export Enterprises, Free Trade Enterprises and Domestic Market Enterprises:
- Direct salaries, wages or labor expenses
- Production supervision salaries
- Raw materials used in the manufacture of products
- Decrease in Goods in Process Account (intermediate goods)
- Decrease in Finished Goods Account
- Supplies and fuels used in production
- Depreciation of machinery and equipment used in production
- Rent and utility charges associated with building, equipment and warehouses used in production
- Financing charges associated with fixed assets used in production the amount of which were not previously capitalized

2. ECOZONE Developer/Operator, Facilities, Utilities and Tourism Enterprises:
- Direct salaries, wages or labor expense
- Service supervision salaries
- Direct materials, supplies used
- Depreciation of machinery and equipment used in registered activities
- Financing charges associated with fixed assets used in registered activities the amount of which were not capitalized
- Rent and utility charges for buildings and capital equipment used in undertaking registered activities

SECTION 8. Repealing Clause – Revenue Regulations No. 1-95 and 16-99 are hereby repealed. Any existing regulations, order or instructions or portions thereof that are inconsistent with these regulations are likewise repealed, amended or modified accordingly.

SECTION 9. Effectivity Clause - These regulations shall take effect fifteen (15) days after publication in a newspaper of general circulation in the Philippines.

(Original Signed)
JUANITA D. AMATONG
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue

REVENUE REGULATIONS NO. 1-2005

SUBJECT: Amending Further Pertinent Provisions of Revenue Regulations No. 7-95, as amended by Revenue Regulations No. 8-2002.

TO: All Internal Revenue Officers & Others Concerned.

SECTION 1. SCOPE. – Pursuant to the provisions of Section 244 of the National Internal Revenue Code of 1997, as amended (Code), in relation to Secs. 5, 6, 105, 109, and 114 of the said Code, these Regulations are hereby promulgated in order to amend Section 4.103-1(w), (x) and (z) of RR 7-95, as amended by RR No. 6-97 and Sec. 4.110-4, as last amended by RR 8-2002.

SEC. 2. AMENDMENTS ON TRANSACTIONS EXEMPT FROM VAT. - Section 4.103-1(w), (x) and (z) of RR 7-95, as amended by RR 6-97, is hereby further amended to read as follows:

“(w) The following sales of real properties are exempt from VAT, namely:

“(1) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business;

“(2) Sale of real properties utilized for low-cost housing as defined by R.A. No. 7279, otherwise known as the “Urban Development Housing Act of 1992” and other related laws, such as R.A. No. 7835 and R.A. No. 8763 wherein the price ceiling per unit is P750,000.00 or as may from time to time be determined by the Housing and Urban Development Coordinating Council (HUDCC) and the National Economic Development Authority (NEDA);

“Low-cost housing” refers to housing projects intended for homeless low-income family beneficiaries, undertaken by the Government or private developers, which may either be a subdivision or a condominium registered and licensed by the Housing and Land Use Regulatory Board (HLURB) under BP Blg. 220, PD No. 957 or any other similar law, wherein the unit selling price is within the selling price ceiling per unit under RA No. 7279, otherwise known as the “Urban Development and Housing Act of 1992” and other related laws, such as R.A. No. 7835 and R.A. No. 8763.

“(3) Sale of real properties utilized for socialized housing as defined under RA No. 7279, and other related laws, such as R.A. No. 7835 and R.A. No. 8763, wherein the price ceiling per unit is P225,000 or as may from time to time be determined by the HUDCC and the NEDA and other related laws.

“Socialized housing” refers to housing program and projects covering houses and lots or homelots only undertaken by the Government or the private sector for the underprivileged and homeless citizens which shall include sites and services development, long-term financing, liberalized terms on interest payments, and such other benefits in accordance with the provisions of RA No. 7279, otherwise known as the “Urban Development and Housing Act of 1992” and R.A. No. 7835 and R.A. No. 8763.

“Socialized housing” shall also refer to projects intended for the underprivileged and homeless wherein the housing package selling price is within the lowest interest rates under the United Home Lending Program (UHLP) or any equivalent housing program of the Government, the private sector or non-government organization.

“(4) Sale by real estate dealers and/or lessors of house and lot and other residential dwellings valued at One Million Five Hundred Thousand Pesos (P1,500,000.00) and below effective January 1, 2005:

Provided, that not later than January 31, 2006 and each calendar year thereafter, the amount of One Million Five Hundred Thousand Pesos (P1,500,000.00) shall be adjusted to its present value using the Consumer Price Index as published by the National Statistics Office (NSO); provided, further, that such adjustment shall be published through revenue regulations to be issued not later than March 31 of every ensuing year.

“(x) Lease of residential units with a monthly rental per unit not exceeding Ten Thousand Pesos (P10,000.00), regardless of the amount of aggregate rentals received by the lessor during the year; Provided, That the exemption likewise applies to lease of residential units where the monthly rental per units exceeds Ten Thousand Pesos (P10,000.00) but the aggregate rentals of the lessor during the year do not exceed P750,000.00. Provided finally, that not later than January 31, 2006 and each calendar year thereafter, the amount of P10,000.00 shall be adjusted to the present value using the Consumer Price Index, as published by the NSO;

“The term ‘residential units’ shall refer to apartments, houses and/or lands on which a tenant’s dwelling is located, used for residential purposes and shall include not only building, parts or units thereof used solely as dwelling places (e.g., dormitories, rooms and bed spaces) except motels, motel rooms, hotels, and hotel rooms. ‘Residential units’ shall also include apartments, houses, building, parts or units thereof used for home industries, retail stores or other business purposes, if the tenant thereof and his family actually live therein and use them principally for dwelling purposes.

“The term ‘unit’ shall mean an apartment unit in the case of apartments; house in the case of residential houses; per person in the case of dormitories, boarding houses and bed spaces; and per room in case of rooms for rent.

“ x x x x x x x x x

“(z) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts does not exceed the amount of Seven Hundred Fifty Thousand Pesos (P750,000.00);

Provided, That not later than January 31, 2006 and each calendar year thereafter, the amount of P750,000.00 shall be adjusted to its present value using the Consumer Price Index, as published by the NSO.”

SEC. 3. AMENDMENTS ON THE PROVISION ON THE SUBMISSION OF QUARTERLY SUMMARY LIST OF SALES AND PURCHASES. - Section 4.110-4 of RR 7-95, as amended by RR 13-97, RR 7-99 and as last amended by RR 8-2002, is hereby further amended to read as follows:

“SEC. 4.110-4. – Submission of Quarterly Summary List of Sales/Purchases. –

“x x x

“b. When and Where to File the Summary List of Sales/Purchases – The quarterly summary list of sales or purchases, whichever is applicable, shall be submitted to the RDO having jurisdiction over the taxpayer, on or before the twenty-fifth (25th) day of the month following the close of the taxable quarter (VAT quarter) – calendar or fiscal quarter. However, taxpayers under the jurisdiction of the Large Taxpayers Service, and those enrolled under the EFPS, may, through electronic filing facility submit their Summary List of Sales/Purchases to the RDO/LTDO/LTAD, on or before the thirtieth (30TH) day of the month following the close of their taxable quarter.

“x x x

SEC. 4. REPEALING CLAUSE. – The provisions of any revenue regulations, revenue memorandum order, revenue memorandum circular or any other issuance of the Bureau of Internal Revenue inconsistent herewith are hereby repealed, amended, or modified accordingly.

SEC. 5. EFFECTIVITY CLAUSE. – These Regulations shall take effect fifteen (15) days after publication in a newspaper of general circulation.

(Original Signed)
JUANITA D. AMATONG
Secretary of Finance
Recommending Approval:
(Original Signed)
GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue
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