FOURTEENTH CONGRESS of the 
) 
REPUBLIC OF THE PHILIPPINES 
) 
Second Regular Session 
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Introduced by HON. RAMON BONG REVILLA, JR. 
EXPLANATORY NOTE 
The President of the Republic of the Philippines in her 2008 State of the 
Nation Address reiterates the importance of the value added tax, to wit: it reduces 
our foreign debts and shore up fiscal independence, more livelihood programs for 
the people and boosts infrastructure projects. 
However, the Filipino people in their day-to-day existence are face with an 
indecisive burden of oil price hikes, high food prices and other utilities. There may 
be a global crisis, but needless to say, it is the government's primary concein to 
address these matters by crafting short or long term solutions to ensure the quality 
of living of its people. 
This representation acquiesced to the fact that the Philippine economy 
might not be able to absorb the revenue losses from the outright scrapping of VAT 
especially on petroleum products and power. Hence, just to mitigate the burden of 
the people, this bill seelts to reduce the VAT on oil and other petroleum products 
and on power from twelve percent (12%) to ten percent (10Y0). According to 
studies conducted by IBON Foundation, reduction o f  VAT on oil products would 
result in the lowering'of its prices that would profit nearly one million public 
utility vehicle drivers and their families, as well as almost nine million household 
LPG users. While, VAT accounts for about 10% of the elect~icity bills - which is 
applied even on systems losses, lifeline rate subsidies and local franchise taxes - 
thus, a reduction would redound to an increase in purchasing power and savings 
for all households. 
In view of the foregoing, immediate passage of this bill is earnestly sought. 


FOURTEENTH CONGRESS of the 
REPUBLIC OF THE PHILIPPINES 
Second Regular Session 
S.B. No. 256 
Introduced by HON. RAMON BONG REVILLA, JR. 
AN ACT 
AMENDING SECTION 108 (A) OF THE NATIONAL INTERNAL REVENUE CODE, 
AS AMENDED BY REPUBLIC ACT 9337. AND FOR OTHER PURI'OSES. 
He if enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled 
Section 1. Section 108 (A) of the Natiunal Internal Revenue Code, as anrenrled by 
Republic Act No. 9337, is hereby anrended tu read as follows: 
"SEC. 108. Value-added Tax on Sale of Services and IJse or Lease of Properties. 
(A) Rate and Base 0fTa.x. - There shall be levied, assessed and collected, a value- 
added tax equivalent to ten percent (10%) of gross receipts derived from the sale 
or exchange of services, including the use or lease of properties: Provided, That 
the President, upon the recommendation of the Secretary of Finance, shall, 
effective January 1, 2006, raise the rate of value-added tax to twelve percent 
(12%), after any ofthe following conditions has been satisfied: 
(i) Value-added tax collection as a percentage of Gross Domestic Product 
(GDP) of the previous year exceeds two and four-fifth percent (2 4/5%); 
or 
(ii) National government deficit as a percentage of GDP of the previous 
year exceeds one and one-half percent (1 I/2%). 
"The phrase 'sale or exchange of services' means the performance of all 
kinds of services in the Philippines for others for a fee, remuneration or 
consideration, including those performed or rendered by construction and 
service contractors; stock, real estate, commercial, customs and 
immigration brokers; lessors of property, whether personal or real; 
warehousing services; lessors or distributors of cinematographic films; 
persons engaged in milling, processing, manufacturing or repacking goods 
for others; proprietors, operators or keepers of hotels, motels, rest-houses, 
pension houses, inns, resorts; proprietors or operators of restaurants, 
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refreshment parlors, cafes and other eating places, including clubs and 
caterers; dealers in securities; lending investors; transportation contractors 
on their transport of goods or cargoes, including persons who transport 
goods or cargoes for hire and other domestic common carriers by land 
relative to their transport of goods or cargoes; common carriers by air and 
sea relative to their transport of passengers, goods or cargoes from one 
place in the Philippines to another place in the Philippines; [sales of 
electricity by generation companies, transmission, and distribution 
companies;] services of franchise grantees of [electric utilities,] telephone 
and telegraph, radio and television broadcasting and all other franchise 
grantees except those under Section 119 of this Code and non-life 
insurance companies (except their crop insurances), including surety, 
fidelity, indemnity and bonding companies; and similar services regardless 
of whether or not the performance thereof calls for the exercise or use of 
the physical or mental faculties. 
THE SALES OF ELECTRICITY BY GENERATION COMPANIES, 
TRANSMISSION, AND DISTREBUTION COMPANIES; AS WELL 
AS THE SERVICES OF FRANCHISE GRANTEES OF ELECTRIC 
UTILITIES; AND SALE OR IMPORTATION OF PETROLEUM 
PRODUCTS AND RAW MATERIALS TO BE USED BY THE 
BUYER OR IMPORTER HIMSELF IN THE MANUFACTURE OF 
PETROLEUM 
PRODUCTS, 
EXCEPT 
LUBRICATING 
OIL, 
PROCESSED GAS, GREASE, WAX, PETROLATUM, COAL AND 
NATURAL GAS IN WHATEVER FORM AND STATE, SHALL 
AFTER THREE (3) MONTHS FROM THE EFFECTIVITY OF 
THIS ACT, SHALL BE LEVIED, ASSESSED AND COLLECTED, A 
OF GROSS RECEIPTS; PROVIDED, THAT AFTER A PERIOD OF 
ONE (1)YEAR FROM THE EFFECTMTY OF THIS ACT, THE 
PRESIDENT, 
UPON 
CONSULTATION 
WITH 
THE 
DEPARTMENT OF FXNANCE AND THE DEPARTMENT OF 
ENERGY, 
SHALL 
DETERMINE 
WHETHER 
TO 
PROSPECTIVELY REMOVE THE FULL TEN PERCENT (10%) 
VAT IMMEDIATELY OR REDUCE IT ON A STAGERRED BASIS. 
1N EITHER CASE, 
THE APPROPRIATE PRESIDENTIAL 
ORDER, AS WELL AS THE NECESSARY IMPLEMENTING 
RULES AND REGULATIONS, SHALL THEN BE ISSUED FOR 
THE PURPOSE. 
The phrase ‘sale or exchange of services’ shall likewise include: 
VALUE-ADDED TAX EQUIVALENT TO TEN PERCENT (10%) 
“(1) xxx 
“(2) xxx 
“(3) xxx 
“(4) xxx 
“(5) xxx 
“(6) xxx 
“(7) xxx 
“(8) xxx 
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"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 advanced 
payments actually or 
constructively received during the taxable quarter for the services 
performed or to be performed for another person, excluding value-added 
tax. 
Sec. 2. Separability Clause. - Any portion or provision of this Act that may be declared 
unconstitutional or invalid shall not havew the effect of nullifying other portions and provisions 
hereof as long as such remaining portion or provision can still subsist and be given effect in their 
entirety. 
Sec. 3. Repealing Clause. - All laws, decrees, orders, rules and regulations, and other 
issuances or parts thereof which are inconsistent with this Act, are hereby repealed, amended and 
modified accordingly. 
Sec. 4. Effectivity Clause. This Act shall take effect immediately upon the completion of 
its publication in at least one newspaper of general circulation. 
Approved, 
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