VAT Reduction Act

Offir of the surd:? REPUBLIC OF THE PHILIPPINES WEED THERE PREE First Regular Session 26 APR 16 A9:13 SENATE RECEIVED BY: S. No. 204'7 Introduced by Senator Bam Aquino AN ACT REDUCING THE VALUE-ADDED TAX (VAT) FROM 12% TO 10%, AMENDING FOR THE PURPOSE SECTIONS 106 (A), 107 (A), AND 108 (A) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED EXPLANATORY NOTE Rising prices continue to put pressure on Filipino families. In recent months, global developments have driven up the cost of fuel, electricity, transport, and food, making it increasingly difficult for ordinary households to make ends meet. For many, especially low- and middle-income families, every peso now matters more than ever. At the center of this challenge is the Value-Added Tax (VAT), a broad-based consumption tax that applies to most goods and services. While VAT has been an important source of government revenue, its uniform application means that it takes up a larger share of the income of poorer households. In times of crisis, this regressive impact becomes even more pronounced. This proposed measure seeks to provide immediate and meaningful relief to consumers by reducing the VAT rate from twelve percent (12%) to ten percent (10%). A reduction in VAT directly lowers the cost of goods and services across the economy, from basic commodities and transportation to utilities and other essential expenses. By easing the tax burden on consumption, this measure aims to help families cope with rising prices and preserve their purchasing power. Lowering VAT can also support economic recovery and growth. With more disposable income, households are better able to sustain spending, which in turn supports businesses, protects jobs, and stimulates economic activity. At a time when uncertainty is high, boosting consumer demand is a critical component of maintaining economic stability. This measure also reflects a broader principle: that in times of hardship, government must act decisively to ease the burden on its people. While fiscal considerations remain important, there is a need to strike a balance between revenue generation and the immediate welfare of Filipino families. A reduction in VAT,

alongside improved tax administration and targeted support measures, can help achieve this balance. Ultimately, this bill is about putting people first, ensuring that economic policy responds to the realities faced by Filipino households today. By reducing VAT, we take a concrete step toward making the cost of living more manageable and supporting a more inclusive and resilient economy. In view of the foregoing, the passage of this bill is earnestly sought. Bam lyunr Teece........ .

Senate REPUBLIC OF THE PHILIPPINES REPEL THE FEL PINESE First Regular Session 26 APR 16 A9:13 SENATE RECEIVED BY: S. No. 204*7 Introduced by Senator Bam Aquino AN ACT REDUCING THE VALUE-ADDED TAX (VAT) FROM 12% TO 10%, AMENDING FOR THE PURPOSE SECTIONS 106 (A), 107 (A), AND 108 (A) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "VAT Reduction Act."

Sec. 2. Section 106 (A) of the National Internal Revenue Code of 1997, as

amended, is hereby further amended to read as follows: "Section 106. Value-Added Tax on Sale of Goods or Properties. - (A) Rate and Base of Tax. - There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, a value-added tax equivalent 7 to [twelve percent (12%)] TEN PERCENT (10%) of the gross sales of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor.

Sec. 3. Section 107 (A) of the National Internal Revenue Code of 1997, as

amended, is hereby further amended to read as follows: "Section 107. Value-Added Tax on Importation of Goods. - (A) In General. - There shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to [twelve percent (12%)] TEN

PERCENT (10%) based on the total value used by the Bureau of Customs in 2 determining tariff and customs duties, excise taxes, if any, and other charges, such 3 tax to be paid by the importer prior to the release of such goods from customs custody: 4 Provided, That where the customs studies are determined on the basis of the quantity 5 or volume of the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any.

Sec. 4. Section 108 (A) of the National Internal Revenue Code of 1997, as

8 amended, is hereby further amended to read as follows: "Section 108. Value-Added Tax on Sale of Services Including Digital Services, and the Use or Lease of Properties. - (A) Rate and Base of Tax. - There shall be levied, assessed and collected, a value-added tax equivalent to [twelve percent (12%)] TEN PERCENT (10%) of the gross sales derived from the sale or exchange of services, including digital services, and the use or lease of properties.

Sec. 6. Implementing Rules and Regulations. - Within sixty (60) days from the

effectivity of this Act, the Department of Finance, in coordination with the Commissioner of the Bureau of Internal Revenue, shall promulgate the rules and regulations necessary to ensure the efficient and effective implementation of this Act.

Sec. 7. Separability Clause. - If any portion or provision of this Act is declared

unconstitutional, the remainder of this Act or any provision not affected thereby shall remain in force and effect.

Sec. 8. Repealing Clause. - Any law, presidential decree or issuance, executive

order, letter of instruction, rule or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

Sec. 9. Effectivity. - This Act shall take effect after fifteen (15) days following

its complete publication in the Official Gazette or in a newspaper of general circulation. Approved,