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(7) The lease of motion picture films, films,
tapes and discs; and
(8) The lease or the use of or the right to use radio, television,
satellite transmission and cable television time.
Lease of properties shall be subject to the tax herein imposed
irrespective of the place where the contract of lease or licensing
agreement was executed if the property is leased or used in the
Philippines.
The term "gross receipts" means the total amount of money or its
equivalent representing the contract price, compensation, service
fee, rental or royalty, including the amount charged for materials
supplied with the services and deposits and advance payments
actually or constructively received during the taxable quarter for
the services performed or to be performed for another person,
excluding value-added tax.
(B) Transactions Subject to Zero Percent (0%) Rate. - The following
services performed in the Philippines by VAT-registered persons
shall be subject to zero percent (0%) rate:
(1) Processing, manufacturing or repacking goods for other persons
doing business outside the Philippines which goods are subsequently
exported, where the services are paid for in acceptable foreign
currency and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP);
(2) Services other than those mentioned in the preceding paragraph,
the consideration for which is paid for in acceptable foreign
currency and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP);
(3) Services rendered to persons or entities whose exemption under
special laws or international agreements to which the Philippines is
a signatory effectively subjects the supply of such services to zero
percent (0%) rate;
(4) Services rendered to vessels engaged exclusively in
international shipping; and
(5) Services performed by subcontractors and/or contractors in
processing converting, or manufacturing goods for an enterprises
whose export sales exceed seventy percent (70%) of total annual
production.
(C) Determination of Tax. - The tax shall be computed by multiplying
the total amount indicated in the official receipt by one-eleventh
(1/11)."
Section. 2. Section 109 of the same Code is hereby amended by
rewording paragraph (l) and inserting additional paragraphs after
(z) which shall now read as follows:
"SEC. 109. Exempt Transactions. - The following shall be exempt from
the value-added tax.
(a) Sale of nonfood agricultural products; marine and forest
products in their original state by the primary producer or the
owner of the land where the same are produced;
(b) Sale of cotton and cotton seeds in their original state; and
copra;
(c) Sale or important of agricultural and marine food products in
their original state, livestock and poultry of a kind generally used
as, or yielding or producing foods for human consumption; and
breeding stock and genetic materials therefor.
Products classified under this paragraph and paragraph (a) shall be
considered in their original state even if they have undergone the
simple processes of preparation or preservation for the market, such
as freezing, drying, salting, broiling, roasting, smoking or
stripping, Polished and/or husked rice, com grits, raw cane sugar
and molasses, and ordinary salt shall be considered in their
original state;
(d) Sale or importation of fertilizers; seeds, seeding and
fingerlings; fish, prawn, livestock and poultry feeds, including
ingredients, whether locally produced or imported, used in the
manufacture of finished feeds (except specialty feeds for race
horses, fighting cocks, aguarium fish, zoo animals and other animals
generally considered as pets);
(e) Sale or importation of coal and natural gas, in whatever form or
state, and petroleum products (except lubricating oil, processed
gas, grease, wax and petrolatum) subject to excise tax imposed under
title VI;
(f) Sale or importation of raw materials to be used by the buyer or
importer himself in the manufacture of petroleum products subject to
excise tax, except lubricating oil, processed gas, grease, wax and
petrolatum;
(g) Importation of passenger and/or cargo vessels or more than five
thousand tons (5,000), whether coastwise or ocean-going, including
engine and spare parts of said vessels to be used by the importer
himself as operator thereof;
(h) Importation of personal and households effects belonging to the
residents of the Philippines returning from abroad and nonresident
citizens coming to resettle in the Philippines; Provided, That such
goods are exemp from customs duties under the Tariff and Customs
Code of the Philippines;
(i) Importation of professional instruments and implements, wearing
apparel, domestic animals, and personal household effects (except
any vehicle, vessel, aircraft, machinery, other goods for use in the
manufacture and merchandise of any kind in commercial quantity)
belonging to person coming to settle in the Philippines, for their
own use and not for sale, barter or exchange, accompanying such
persons, or arriving within ninety (90) days before or after their
arrival, upon the production of evidence satisfactory to the
Commissioner, that such persons are actually coming to settle in the
Philippines and that the change of residence is bona fide;
(j) Services subject to percentage tax under Title V;
(k) Services by agricultural contract growers and milling for others
of palay into rice, corn into grits and sugar cane into raw sugar;
(l) Medical, dental, hospital and veterinary services except those
rendered by professionals;
(m) Educational services rendered by private educational
institutions, duly accredited by the Department of Education,
Culture and Sports (DECS) and the Commission of Higher Education (CHED),
and those rendered by government educational institutions;
(n) Sale by the artist himself of his works of art, literary works,
musical compositions and similar creations, or his services
performed for the production of such works;
(o) Services rendered by individuals pursuant to an
employer-employee relationship;
(p) Services rendered by regional or area headquarters established
in the Philippines by multinational corporations which act as
supervisory, communications and coordinating centers for their
affiliates, subsidiaries or branches in the Asia-Pacific Region and
do not earn or derive income from the Philippines;
(q) Transaction which are exempt under international agreements to
which the Philippines is a signatory or under special laws, except
those under Presidential Decree Nos. 66, 529 and 1590;
(r) Sales by agricultural cooperatives duly registered with the
Cooperative Development Authority to their members as well as sale
of their produce, whether in its original state or processed form,
to non-members; their importation of direct farm inputs, machineries
and equipment, including spare parts thereof, to be used directly
and exclusively in the production and/or processing of their
produce;
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