After SC decision, BIR wants VAT on toll by August


Posted at Jul 22 2011 01:24 PM | Updated as of Jul 23 2011 12:43 AM

MANILA, Philippines - The Bureau of Internal Revenue (BIR) may start imposing the 12% value-added tax (VAT) on the use of toll roads next month after the Supreme Court lifted its temporary restraining order (TRO) on the measure.

The high court ruled in a 19-page unanimous decision promulgated July 19 that the imposition of VAT on tollway operations was allowed by law, removing the last remaining hindrance to its long-delayed implementation.

BIR Commissioner Kim Henares said: "The decision is good for us, but I have not received [it] yet. We have to get the copy of the decision and from there, we will coordinate with the Toll Regulatory Board (TRB) and all these toll companies."

When asked when they planned to implement this, Henares replied: "At the earliest, August."

Henares said the government was looking at P2 billion to P3 billion additional revenue annually from the VAT on toll.

Last year, the SC stopped the BIR from collecting consumption tax on toll road use, three days before it was scheduled to be implemented.

The imposition of VAT on tollways was supposed to have taken effect on August 16, 2010, but various sectors blocked the move.

They said the measure was illegal as it was a "tax on tax," and warned it would jack up prices of goods and services.

The government, however, argued that the law imposes VAT on the sale or exchange of services, which includes the operation of expressways.

The BIR also insisted that the tax should have been collected since 2005.

In its recent decision, the SC stressed that "VAT on tollway operations cannot be a tax on tax even if toll fees were deemed as a user's tax" since "VAT is assessed against the tollway operator's gross receipts and not necessarily on the toll fees."