The Department of Finance and the Bureau of Internal Revenue ended years of suspense and imposed value-added tax on banks as provided under Revenue Regulations (RR) No. 12-2003 last March 10.
RA 8424, or the National Internal Revenue Code, which took effect on Jan. 1, 1998, provided for the imposition of VAT on the sale of goods or the sale or exchange of services.
Services refer to the performance of all kinds of services in the Philippines for a fee, remuneration or consideration, including those performed or rendered by financial institutions.
A series of deferments delaying the imposition of this regulation have now expired.
Coverage
RR 12-2003 governs the imposition of VAT on banks and other financial institutions, such as non-bank financial intermediaries including quasi banks and finance companies. This, however, excludes insurance companies.
