Tax Alert No. 41 [Revenue Regulations (RR) No. 8-2021 dated 11 June 2021]

Amending Certain Provisions of Revenue Regulations No. 4-2021, which implemented the Value-Added Tax (VAT) and Percentage Tax Provisions Under Republic Act (RA) No. 11534, or the Corporate Recovery and Tax Incentives for Enterprise Act (CREATE) 

The Secretary of Finance has issued RR No. 8-2021 to revise certain provisions of RR No. 4-2021 which implemented the VAT and Percentage Tax provisions under the CREATE Act.

The following are the significant changes under RR No. 8-2021:

1. The VAT-exempt threshold of Two Million Pesos (PHP2,000,000.00) for the sale of house and lot and other residential dwellings is adjusted to Three Million One Hundred Ninety-Nine Thousand Two Hundred Pesos (PHP3,199,200.00) beginning 1 January 2021.
2. The sale and importation of the following items should be exempt from the issuance of the Authority to Release Imported Goods, but may be subject to post-audit by the BIR or the Bureau of Customs, as applicable:
   • Capital equipment, its spare parts and raw materials, necessary for the production of personal protective equipment components such as coveralls, gown, surgical cap, surgical mask, n-95 mask, scrub suits, goggles and face shield, double or surgical gloves, dedicated shoes, and shoe covers, for COVID-19 prevention;
   • All drugs, vaccines and medical devices specifically prescribed and directly used for the treatment of COVID-19; and
   • Drugs for the treatment of COVID-19 approved by the Food and Drug Administration for use in clinical trials, including raw materials directly necessary for the production of such drugs.
3. Percentage taxpayers who paid an excess amount of tax due to the decrease of tax rate from 3% to 1% starting 1 July 2020 until the effectivity of RR No. 4-2021 are allowed to get a tax refund under the following events:
   • The taxpayer shifted from non-VAT to VAT-registered status; or
   • The taxpayer has opted to avail the eight percent (8%) income tax rate at the beginning of taxable year 2021.

These Regulations shall take effect 15 days following its publication on 12 June 2021.

You may access the full version of RR No. 8-2021 through the BIR website.