The bureau has issued recently the Revenue Memorandum Circular (RMC) No. 8-2017 to clarify the Tax Treatment of Value-Added Tax (VAT) on Government Money Payments for OECF Funded Projects under Exchange of Notes Between Republic of the Philippines and the Government of Japan.
This is related to the Exchange of Notes between the Republic of the Philippines and the Government of Japan for OECF- Funded Projects ("Exchange of Notes") undertaken in the Philippines, the standard clauses pertaining to the tax treatment of participating Japanese suppliers, contractors and nationals clearly state that the Japanese suppliers, contractors or nationals engaged in OECF-Funded projects in the Philippines shall not be required to shoulder any fiscal levies and/or taxes associated with the project.
Applied to VAT, the 12% VAT under Section 106 and Section 108 of the Tax Code, as amended, imposed on all sales of goods and services, including sales of goods and services to the Government, shall be assumed by the Philippine Government or its executing agencies pursuant to the Exchange Notes.
It is stated in the circular that an y ruling or revenue issuance is inconsistent with this is hereby amended, repealed or modified accordingly.
Please refer: http://www.bir.gov.ph/images/bir_files/internal_communications_2/RMCs/RMC%20No%208-2017.pdf of the full text of RMC No. 8-2017.
