PRESCRIBING THE THRESHOLD AMOUNT OF GROSS SALES AND/OR RECEIPTS FOR VALUE ADDED TAX PURPOSES

WHEREAS, Section 103(t) of the
National Internal Revenue Code (the “Tax Code”) as amended by R.A. 7716,
provides that the President shall, upon recommendation of the Secretary of
Finance, set the threshold amount of gross sales and/or receipts of
transactions to be exempted from value added tax;

WHEREAS, the Secretary of
Finance has recommended that the threshold amount be set at FIVE HUNDRED
THOUSAND PESOS (P500,000.00);

NOW, THEREFORE, I, FIDEL
V. RAMOS, President of the Republic of the Philippines, by virtue of
the powers vested in me by law, and in conformity with the requirement set forth
in Section 103(t) of the Tax Code, as amended, do hereby declare that all
transactions involving sale or lease of goods or properties or the performance
of services other than those mentioned in subparagraphs (a) to (s) of the
aforementioned section of the Tax Code, the gross annual sales and/or receipts
of which do not exceed FIVE HUNDRED THOUSAND PESOS (P500,000.00) are exempt
from value added tax, provided however, that any person
covered by the foregoing exemption may apply for registration as a VAT
registered person not later than ten (10) days before the beginning of the
taxable quarter and shall pay the annual registration fee prescribed in Section
107(a) of the Tax Code and, provided finally, that any person
falling under the foregoing exemption shall pay a tax equivalent to three
percent (3%) upon the effectivity of R.A. No. 7716 and four percent (4%) two
(2) years thereafter, of his gross quarterly sales and/or receipts.

Done in the City of Manila this
14th day of June in the Year of Our Lord, nineteen hundred and ninety four.

(Sgd.) FIDEL
V. RAMOS
President of the Philippines

By the President:

(Sgd.) TEOFISTO T. GUINGONA, JR.
Executive Secretary

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