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Key Points of the VAT Reform |  | | | | | | | | "With
the additional revenue from VAT we can expect to balance the budget and have more
funds for basic public services." | | | | Gary
B. Teves | Finance
Secretary | | |
| | |
Reforming
our VAT system is one of the most important components of our drive to address
the country's budget deficit. With the additional revenue from VAT, we are hoping
to balance the budget by 2008 and have more funds available for basic public services.
The VAT Reform Law (RA No. 9337) puts in place key revenue generating measures
but tempers their effects on the poor by providing sufficient mitigating measures.
We assure the public that the Department of Finance is taking the lead in putting
in place adequate support mechanisms for the effective implementation, monitoring,
and assessment of the VAT Reform Law and their impact on consumers."
| | |  | | | | | 10%
VAT rate is retained; however, the President shall increase the VAT rate to 12%
starting January 1, 2006 if (1) VAT collection-to-GDP ratio for 2005 exceeds 2.8%
or (b) the National Government deficit-to-GDP ratio for 2005 exceeds 1.5
| - The
following goods and services are now subject to VAT:
o Coal, Natural Gas
and other indigenous fuels
o Petroleum products and their raw materials
o
Power
o Electric cooperatives
o Domestic transport of passengers by air
and sea
o Medical services
o Legal services
oCotton and cotton seeds;
non-food agricultural products
oWorks of art, literary works, musical composition
| The
following goods and services are VAT zero-rated:
o Transport of passenger or
cargo by air or sea to a foreign country
o Services rendered to aircraft and
vessels engaged in international transport
o Sale of goods supplies and fuel
to aircraft and vessels engaged in international transport |
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