33868rr 4-2007 - REVENUE REGULATIONS NO 4-2007 issued on...

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REVENUE REGULATIONS NO. 4-2007 issued on March 20, 2007 amends certain provisions of Revenue Regulations (RR) No. 16-2005, as amended, otherwise known as the Consolidated Value-Added Tax (VAT) Regulations of 2005. VAT is imposed and collected on every sale, barter or exchange, or transactions “deemed sale” of taxable goods or properties at the rate of 12% (starting February 1, 2006) of the gross selling price or gross value in money of the goods or properties sold, bartered, or exchanged, or deemed sold in the Philippines. Sale of residential lot with gross selling price exceeding P 1,500,000.00, residential house and lot or other residential dwellings with gross selling price exceeding P 2,500,000.00, where the instrument of sale (whether the instrument is nominated as a deed of absolute sale, deed of conditional sale or otherwise) is executed on or after November 1, 2005 , shall be subject to 10% output VAT and starting February 1, 2006, to 12% output VAT . Installment sale of residential house and lot or other residential dwellings with gross selling price exceeding P 1,000,000.00, where the instrument of sale (whether the instrument is nominated as a deed of absolute sale, deed of conditional sale or otherwise) was executed prior to November 1, 2005 shall be subject to 10% output VAT. In the case of sale of real property on installment plan (means that initial payments in the year of sale do not exceed 25% of the gross selling price), the seller shall be subject to output VAT on the installment payments received, including the interests and penalties for late payment, actually and/or constructively received, subject to the provisions of Sec.4.106-4 of the Regulation. Correspondingly, the buyer of the property can claim the input tax in the same period as the seller recognized the output tax. Installment payments, including interests and penalties, actually and/or constructively received starting February 1, 2006 shall be subject to 12% output VAT. In the case of sale of real properties on a deferred-payment basis (means that initial payments made in the year of sale of real property exceeded 25% of gross selling price), the transaction shall be treated as cash sale which makes the entire selling price taxable in the month of sale. Output tax shall be recognized by the seller and input tax shall accrue to the buyer at the time of the execution of the instrument of sale. Payments subsequent to “initial payments” shall no longer be subject to output VAT, in the case of sale on a deferred payment basis. In the case of sale, barter or exchange of real property subject to VAT, gross selling price shall mean the consideration stated in the sales document or the fair market value, whichever is higher. If the VAT is not billed separately in the document of sale, the selling price or the consideration stated therein shall be deemed to be inclusive of VAT. The term ‘fair market value’ shall mean whichever is higher of: 1) the fair market value as
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This note was uploaded on 12/07/2011 for the course TAXATION 101 taught by Professor Atty.phua during the Spring '11 term at University of the Philippines Diliman.

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33868rr 4-2007 - REVENUE REGULATIONS NO 4-2007 issued on...

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