I.

General VAT Queries

Who are liable to register as VAT taxpayers?

Any person who, in the course of trade or business, sells, barters or exchanges goods or properties
or engages in the sale or exchange of services shall be liable to register if:

His gross sales or receipts for the past twelve (12) months, other than those that are exempt under
Section 109 (A) to (U), have exceeded Three Million Pesos (P3,000,000.00): or

There are reasonable grounds to believe that his gross sales or receipts for the next twelve (12)
months, other than those that are exempt under Section 109 (A) to (U), will exceed Three Million
Pesos (P3,000,000.00).

When is a new VAT taxpayer required to apply for registration and pay the registration fee?

New VAT taxpayers shall apply for registration as VAT Taxpayers and pay the corresponding
registration fee of five hundred pesos (P500.00) using BIR Form No. 0605 for every separate or
distinct establishment or place of business before the start of their business following existing
issuances on registration.

Thereafter, taxpayers are required to pay the annual registration fee of five hundred pesos
(P500.00) not later than January 31, every year.

What compliance activities should a VAT taxpayer, after registration as such, do promptly or
periodically?

The following compliance activities must be performed by a VAT-registered taxpayer:

Pay the annual registration fee of P500.00 for every place of business or establishment that
generates sales;

Register the books of accounts of the business/occupation/calling, including practice of

profession, before using the same;

Register the sales invoices and official receipts as VAT-invoices or VAT official receipts for use on
transactions subject to VAT. (If there are other transactions not subject to VAT, a separate set of
non-VAT invoices or non-VAT official receipts need to be registered for use on transactions not
subject to VAT);

Filing of the Monthly Value-added Tax Declaration on or before the 20th day following the end of
the taxable month (for manual filers)/on or before the prescribed due dates enunciated in RR No.
16-2005 (for e-filers) using BIR Form No. 2550M and of the Quarterly VAT Return on or before
the 25th day following the end of the taxable quarter using BIR Form No. 2550Q, reflecting
therein gross receipts (for seller of service)/ gross sales (for seller of goods) and output tax (VAT
on sales); purchases of goods and services made in the course of trade or business/exercise of
profession and input tax (VAT on purchases), other allowable tax credits as in the case of advance
VAT payment and VAT withheld by government payors, and VAT payable or excess input VAT,
whichever is applicable, with the accredited agent banks (AABs) of the BIR or Revenue
Collection Officers (RCOs) of the BIR (in areas without AAB), for returns with payment, or with
the RDO/LTDO having jurisdiction over the taxpayer (home RDO/LTDO), for returns without
payment. (The monthly VAT Declaration and the Quarterly VAT Return shall reflect the
consolidated total for all the taxable lines of activity and all the establishments - head office and
branches);

Submit with the RDO/LTDO having jurisdiction over the taxpayer, on or before the deadline set in
the filing of the Quarterly VAT Return, the soft copy of the Quarterly Schedule of Monthly Sales
and Output Tax (if the quarterly sales exceed P2,500,000.00), and the soft copy of the Quarterly
Schedule of Monthly Domestic Purchases and Input Tax/ the soft copy of the Schedule of
Transactional/Individual Importation ( if the quarterly total purchases exceed P1,000,000.00),
reflecting therein the required data prescribed under existing revenue issuances.

What is the liability of a taxpayer becoming liable to VAT and did not register as such?

Any person who becomes liable to VAT and fails to register as such shall be liable to pay the
output tax as if he is a VAT-registered person, but without the benefit of input tax credits for the
period in which he was not properly registered.

Who may opt to register as VAT and what will be his liability?

Any person who is VAT-exempt under Sec. 109 of the Tax Code, as amended, may, in relation to
Sec. 109 (2) of the same Code, elect to be VAT-registered by registering with the RDO that has
jurisdiction over the head office of that person, and pay the annual registration fee of P500.00 for
every separate and distinct establishment.

Any person who is VAT-registered but enters into transactions which are exempt from VAT (mixed
transactions) may opt that the VAT apply to his transactions which would have been exempt under
Section 109 of the Tax Code, as amended.

Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the
preceding year do not exceed ten million pesos (P10,000,000.00) derived from the business
covered by the law granting the franchise may opt for VAT registration. This option, once
exercised, shall be irrevocable. (Sec. 119, Tax Code).

Any person who elects to register under optional registration shall not be allowed to cancel his
registration for the next three (3) years.

The above-stated taxpayers may apply for VAT registration not later than ten (10) days before the
beginning of the calendar quarter and shall pay the registration fee unless they have already paid at
the beginning of the year. In any case, the Commissioner of Internal Revenue may, for
administrative reason deny any application for registration. Once registered as a VAT person, the
taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day
of the month following registration.

What are the instances when a VAT-registered person may cancel his VAT registration?

If he makes a written application and can demonstrate to the commissioner's satisfaction that his
gross sales or receipts for the following twelve (12) months, other than those that are exempt
under Section 109 (A) to (U), will not exceed Three Million Pesos (P3,000,000.00); or

If he has ceased to carry on his trade or business, and does not expect to recommence any trade or
business within the next twelve (12) months.

When will the cancellation for registration be effective?

The cancellation for registration will be effective from the first day of the following month the
cancellation was approved.

What is the invoicing/receipt requirement of a VAT-registered person?

A VAT registered person shall issue :

A VAT invoice for every sale, barter or exchange of goods or properties; and

A VAT official receipt for every lease of goods or properties and for every sale, barter or exchange
of services.

May a VAT-registered person issue a single invoice/ receipt involving VAT and Non-VAT
transactions?

Yes. He may issue a single invoice/ receipt involving VAT and non-VAT transactions provided that
the invoice or receipt shall clearly indicate the break-down of the sales price between its taxable,
exempt and zero-rated components and the calculation of the Value-Added Tax on each portion of
the sale shall be shown on the invoice or receipt.

May a VAT- registered person issue separate invoices/ receipts involving VAT and Non-VAT
transactions?

Yes. A VAT registered person may issue separate invoices/ receipts for the taxable, exempt, and
zero-rated component of its sales provided that if the sales is exempt from value-added tax, the
term "VAT-EXEMPT SALE" shall be written or printed prominently on the invoice or receipt and
if the sale is subject to zero percent (0%) VAT, the term "ZERO-RATED SALE" shall be written
or printed prominently on the invoice or receipt.

How is the Value-Added Tax presented in the receipt/ invoice?

The amount of the tax shall be shown as a separate item in the invoice or receipt.

Sample:

Sales Price P 100,000.00

VAT 12,000.00
Invoice Amount 112,000.00
What is the information that must be contained in the VAT invoice or VAT official receipt?

Name of Seller

Description of the goods or properties or nature of the service

Unit cost

Quantity

Date of transaction

TIN of buyer, if VAT- registered and amount exceeds P1,000.00

Address of Buyer

Business Style of Buyer

Name of Buyer

Statement that the seller is a VAT-registered person, followed by his TIN

Business Address of the Seller

Business Style of the Seller

Purchase price plus the VAT, provided that

The amount of tax shall be shown as a separate item in the invoice or receipt;
If the sale is exempt from VAT, the term "VAT-EXEMPT SALE" shall be written or printed
prominently on the invoice or receipt;
If the sale is subject to zero percent (0%) VAT, the term "ZERO-RATED SALE" shall be written
or printed prominently on the invoice receipt; and
If the sale involves goods, properties or services some of which are subject to and some of which
are zero-rated or exempt from VAT, the invoice or receipt shall clearly indicate the breakdown of
the sales price between its taxable, exempt and zero-rated components, and the calculation of the
VAT on each portion of the sale shall be shown on the invoice or receipt.
Authority to Print Receipt Number at the lower left corner of the invoice or receipt.

What is the liability of a VAT-registered person in the issuance of a VAT invoice/ receipt for VAT-
exempt transactions?

If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT-exempt
transaction but fails to display prominently on the invoice or receipt the words "VAT-EXEMPT
SALE", the transaction shall become taxable and the issuer shall be liable to pay the VAT thereon.
The purchaser shall be entitled to claim an input tax credit on his purchase.

What is "output tax"?

Output tax means the VAT due on the sale, lease or exchange of taxable goods or properties or
services by any person registered or required to register under Section 236 of the Tax Code.

What is "input tax"?

Input tax means the VAT due on or paid by a VAT-registered on importation of goods or local
purchase of goods, properties or services, including lease or use of property in the course of his
trade or business. It shall also include the transitional input tax determined in accordance with
Section 111 of the Tax Code, presumptive input tax and deferred input tax from previous period.

Does amortization of input VAT still allowable?

Yes , but is only allowed until December 31, 2021 after which taxpayers with unutilized input VAT
on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully
utilized: Provided, That in the case of purchase of services, lease or use of properties, the input tax
shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental,
royalty or fee.

What will be the basis of the date of cancellation?

It is the date of issuance of tax clearance by the BIR, after full settlement of all tax liabilities
relative to cessation of business or change of status of concerned taxpayer

What comprises "goods or properties"?

The term "goods or properties" shall mean all tangible and intangible objects, which are capable of
pecuniary estimation and shall include, among others:
Real properties held primarily for sale to customers or held for lease in the ordinary course of
trade or business;

The right or the privilege to use patent, copyright, design or model, plan, secret formula or
process, goodwill, trademark, trade brand or other like property or right;

The right or privilege to use in the Philippines of any industrial, commercial or scientific
equipment;

The right or the privilege to use motion picture films, films, tapes and discs; and

Radio, television, satellite transmission and cable television time.

What comprises "sale or exchange of services"?

The term "sale or exchange of services" means the performance of all kinds of services in the
Philippines for others for a fee, remuneration or consideration, whether in kind or in cash,
including those performed or rendered by the following:

Construction and service contractors;

Stock, real estate, commercial, customs and immigration brokers;

Lessors of property, whether personal or real;

Persons engaged in 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,
theatres, and movie houses;

Proprietors or operators of restaurants, 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;

Sale of electricity by generating, transmission by any entity including the National Grid
Corporation of the Philippines (NGCP), and distribution companies including electric
cooperatives shall be subject to twelve percent (12%) VAT on their gross receipts.;

Franchise grantees of electric utilities, telephone and telegraph, radio and/or television
broadcasting and all other franchise grantees, except franchise grantees of radio and/or television
broadcasting whose annual gross receipts of the preceding year do not exceed Ten Million Pesos
(P10,000,000.00), and franchise grantees of gas and water utilities;

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 of use
of the physical or mental faculties.

The phrase "sale or exchange of services" shall likewise include:

The lease of use of or the right or privilege to use any copyright, patent, design or model, plan,
secret formula or process, goodwill, trademark, trade brand or other like property or right;

The lease or the use of, or the right to use of any industrial, commercial or scientific equipment;

The supply of scientific, technical, industrial or commercial knowledge or information;

The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of
enabling the application or enjoyment of any such property, or right or any such knowledge or
information;

The supply of services by a nonresident person or his employee in connection with the use of
property or rights belonging to, or the installation or operation of any brand, machinery or other
apparatus purchased from such non-resident person;

The supply of technical advice, assistance or services rendered in connection with technical
management or administration of any scientific, industrial or commercial undertaking, venture,
project or scheme;

The lease of motion picture films, films, tapes and discs; and

The lease or the use of or the right to use radio, television, satellite transmission and cable
television time.
What is a zero-rated sale?

It is a sale, barter or exchange of goods, properties and/or services subject to 0% VAT pursuant to
Sections 106 (A) (2) and 108 (B) of the Tax Code. It is a taxable transaction for VAT purposes, but
shall not result in any output tax. However, the input tax on purchases of goods, properties or
services, related to such zero-rated sales, shall be available as tax credit or refund in accordance
with existing regulations.

What transactions are considered as zero-rated sales?

The following services performed in the Philippines by VAT-registered person shall be subject to
zero percent (0%) rate:

Processing, manufacturing or repacking goods for other persons doing business outside the
Philippines which goods are subsequently exported where the services are paid for in acceptable
foreign currency and accounted for in accordance with the rules and regulations of the Bangko
Sentral ng Pilipinas (BSP);

Services other than processing, manufacturing or repacking rendered to a person engaged in

business conducted outside the Philippines or to a non-resident person engaged in business who is
outside the Philippines when the services are performed, the consideration for which is paid for in
acceptable foreign currency and accounted for in accordance with the rules and regulations of the
Bangko Sentral ng Pilipinas (BSP);

Services rendered to persons or entities whose exemption under special laws or international
agreements to which the Philippines is a signatory effectively subjects the supply of such services
to zero percent (0%) rate;

Services rendered to persons engaged in international shipping or air transport operations,

including leases of property for use thereof; Provided, that these services shall be exclusively for
international shipping or air transport operations. (Thus, the services referred to herein shall not
pertain to those made to 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, the same
being subject to twelve percent (12%) VAT under Sec. 108 of the Tax Code, as amended);

Services performed by subcontractors and/or contractors in processing, converting, or

manufacturing goods for an enterprise whose export sales exceeds seventy percent (70%) of total
annual production;

Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign
country. (Gross receipts of international air carriers and international sea carriers doing business in
the Philippines derived from transport of passengers and cargo from the Philippines to another
country shall be exempt from VAT; however they are still liable to a percentage tax of three
percent (3%) based on their gross receipts derived from transport of cargo from the Philippines to
another country as provided for in Sec. 118 of the Tax Code, as amended); and

Sale of power or fuel generated through renewable sources of energy such as, but not limited to,
biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other shipping
sources using technologies such as fuel cells and hydrogen fuels; Provided, however that zero-
rating shall apply strictly to the sale of power or fuel generated through renewable sources of
energy, and shall not extend to the sale of services related to the maintenance or operation of
plants generating said power.

The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:

Export sales
The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of
any shipping arrangement that may be agreed upon which may influence or determine the transfer
of ownership of the goods so exported, paid in acceptable foreign currency or its equivalent in
goods or services, and accounted for in accordance with the rules and regulations of the Bangko
Sentral ng Pilipinas (BSP);

The sale of raw materials or packaging materials to a non-resident buyer for delivery to as a
resident local export-oriented enterprise to be used in manufacturing, processing, packing or
repacking in the Philippines of the said buyer's goods, paid for in acceptable foreign currency, and
accounted for in accordance with the rules and regulations of the BSP;

The sale of raw materials or packaging materials to an export-oriented enterprise whose export
sales exceed seventy percent (70%) of total annual production;

Transactions considered export sales under Executive Order No. 226, otherwise known as the
Omnibus Investments Code of 1987, and other special laws; and

The sale of goods, supplies, equipment and fuel to persons engaged in international shipping or
international air transport operations; Provided, That the goods, supplies, equipment, and fuel shall
be used exclusively for international shipping or air transport operations; Provided, that the same
is limited to goods, supplies, equipment and fuel that shall be used in the transport of goods and
passengers from a port in the Philippines directly to a foreign port, or vice-versa without docking
or stopping at any other port in the Philippines unless the docking or stopping at any other
Philippine port is for the purpose of unloading passengers and/or cargoes that originated from
abroad, or to load passengers and/or cargoes bound for abroad;Provided, further, that if any
portion of such fuel, goods or supplies is used for purposes other than the mentioned in this
paragraph, such portion of fuel, goods and supplies shall be subject to twelve percent (12%)
output VAT.

Sales to Persons or Entities Deemed Tax-exempt under Special Law or International Agreement
Sale of goods or property to persons or entities who are tax-exempt under special laws or
international agreements to which the Philippines is a signatory, such as, Asian Development Bank
(ADB), International Rice Research Institute (IRRI), subject such sales to zero rate.

What are the transactions which are no longer subject to zero-percent (0%)?

Sale of gold to BSP

Foreign-currency denominated sales

Upon the successful establishment and implementation of an enhanced VAT refund system by the
Department of Finance (DOF), what are the transactions that will now be subject to twelve percent
(12%) and no longer be subject to zero percent (0%)?

The sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident
local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in
the Philippines of the said buyer's goods, paid for in acceptable foreign currency, and accounted
for in accordance with the rules and regulations of the BSP;

The sale of raw materials or packaging materials to an export-oriented enterprise whose export
sales exceed seventy percent (70%) of total annual production;

Transactions considered export sales under Executive Order No. 226, otherwise known as the
Omnibus Investments Code of 1987, and other special laws

Processing, manufacturing or repacking goods for other persons doing business outside the
Philippines which goods are subsequently exported where the services are paid for in acceptable
foreign currency and accounted for in accordance with the rules and regulations of the Bangko
Sentral ng Pilipinas (BSP); and

Services performed by subcontractors and/or contractors in processing, converting, or

manufacturing goods for an enterprise whose export sales exceeds seventy percent (70%) of total
annual production.

What transactions are considered deemed sales?

The following transactions are considered as deemed sales:

Transfer, use or consumption, not in the course of business, of goods or properties originally
intended for sale or for use in the course of business. Transfer of goods or properties not in the
course of business can take place when VAT-registered person withdraws goods from his business
for his personal use;

Distribution or transfer to:

Shareholders or investors as share in the profits of the VAT-registered person; or
Creditors in payment of debt or obligation

Consignment of goods if actual sale is not made within sixty (60) days following the date such
goods were consigned. Consigned goods returned by the consignee within the 60-day period are
not deemed sold;

Retirement from or cessation of business, with respect to all goods on hand, whether capital
goods, stock-in-trade, supplies or materials as of the date of such retirement or cessation, whether
or not the business is continued by the new owner or successor. The following circumstances shall,
among others, give rise to transactions "deemed sale";

Change of ownership of the business. There is a change in the ownership of the business when a
single proprietorship incorporated; or the proprietor of a single proprietorship sells his entire
business

Dissolution of a partnership and creation of a new partnership which takes over the business.

What is VAT-exempt sale?

It is a sale of goods, properties or service and the use or lease of properties which is not subject to
output tax and whereby the buyer is not allowed any tax credit or input tax related to such exempt
sale.

What are the VAT-exempt transactions?

Sale or importation of agricultural and marine food products in their original state, livestock and
poultry of a kind generally used as, or yielding or producing foods for human consumption; and
breeding stock and genetic materials therefore;

Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and
poultry feeds, including ingredients, whether locally produced or imported, used in the
manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium
fish, zoo animals and other animals considered as pets);

Importation of personal and household effects belonging to residents of the Philippines returning
from abroad and non-resident citizens coming to resettle in the Philippines; Provided, that such
goods are exempt from custom duties under the Tariff and Customs Code of the Philippines;

Importation of professional instruments and implements, tools of trade, occupation or

employment, wearing apparel, domestic animals, and personal and household effects ( except
vehicles, vessels, aircrafts machineries and other similar goods for use in manufacture which are
subject to duties, taxes and other charges) belonging to persons coming to settle in the Philippines
or Filipinos or their families and descendants who are now residents or citizens of other countries,
such parties hereinafter referred to as overseas Filipinos, in quantities and of the class suitable to
the profession, rank or position of the persons importing said items, for their own use and not
barter or sale, accompanying such persons, or arriving within a reasonable time; Provided, That
the Bureau of Customs may, upon the production of satisfactorily evidence that such persons are
actually coming to settle in the Philippines and that the goods are brought from their place of
residence, exempt such goods from payment of duties and taxes.

Services subject to percentage tax under Title V of the Tax Code, as amended;

Services by agricultural contract growers and milling for others of palay into rice, corn into grits,
and sugar cane into raw sugar;

Medical, dental, hospital and veterinary services except those rendered by professionals;

Educational services rendered by private educational institutions duly accredited by the

Department of Education (DepED), the Commission on Higher Education (CHED) and the
Technical Education and Skills Development Authority (TESDA) and those rendered by the
government educational institutions;

Services rendered by individuals pursuant to an employer-employee relationship;

Services rendered by regional or area headquarters established in the Philippines by multinational

corporations which act as supervisory, communications and coordinating centers for their
affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn or derive income
from the Philippines;

Transactions which are exempt under international agreements to which the Philippines is a
signatory or under special laws except those granted under P.D. No. 529 - Petroleum Exploration
Concessionaires under the Petroleum Act of 1949;

Sales by agricultural cooperatives duly registered and in good standing with the Cooperative
Development Authority (CDA) to their members, as well as of their produce, whether in its
original state or processed form, to non-members, their importation of direct farm inputs,
machineries and equipment, including spare parts thereof, to be used directly and exclusively in
the production and/or processing of their produce;

Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered and
in good standing with the Cooperative Development Authority;

Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with and in
good standing with CDA; Provided, that the share capital contribution of each member does not
exceed Fifteen Thousand Pesos (P15,000.00) and regardless of the aggregate capital and net
surplus ratably distributed among the members;
Export sales by persons who are not VAT-registered;

The following sales of real properties:

Sale of real properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business.

Sale of real properties utilized for low-cost housing as defined by RA No. 7279, otherwise known
as the "Urban Development and Housing Act of 1992" and other related laws, such as RA No.
7835 and RA No. 8763;

Sale of real properties utilized for specialized housing as defined under RA No. 7279, and other
related laws, such as RA No. 7835 and RA No. 8763, wherein price ceiling per unit is Php
450,000.00 or as may from time to time be determined by the HUDCC and the NEDA and other
related laws;

Sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000.00) and
below, or house and lot and other residential dwellings valued at Two Million Five Hundred
Thousand Pesos (P2,500,000.00) and below, as adjusted using latest Consumer Price Index values.
(If two or more adjacent lots are sold or disposed in favor of one buyer, for the purpose of utilizing
the lots as one residential lot, the sale shall be exempt from VAT only if the aggregate value of the
lots do not exceed One Million Five Hundred Thousand Pesos (P1,500,000.00). Adjacent
residential lots, although covered by separate titles and/or separate tax declarations, when sold or
disposed to one and the same buyer, whether covered by one or separate Deed of Conveyance,
shall be presumed as a sale of one residential lot.)

Lease of residential units with a monthly rental per unit not exceeding Fifteen Thousand Pesos
(P15,000.00), regardless of the amount of aggregate rentals received by the lessor during the year;
Provided, that not later than January 31, 2009 and every three (3) years thereafter, the amount of
P10,000.00 shall be adjusted to its present value using the Consumer Price Index, as published by
the Philippine Statistics Authority (Formerly known as NSO);

Sale, importation, printing or publication of books and any newspaper, magazine, review or
bulletin which appears at regular intervals with fixed prices for subscription and sale and which is
not devoted principally to the publication of paid advertisements;

Transport of passengers by international carriers;

Sale, importation or lease of passenger or cargo vessels and aircraft, including engine equipment
and spare parts thereof for domestic or international transport perations; Provided, that the
exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shall
be subject to the requirements on restriction on vessel importation and mandatory vessel
retirement program of Maritime Industry Authority (MARINA);
Importation of fuel, goods and supplies by persons engaged in international shipping or air
transport operations; Provided, that the said fuel, goods and supplies shall be used exclusively or
shall pertain to the transport of goods and/or passenger from a port in the Philippines directly to a
foreign port, or vice-versa, without docking or stopping at any other port in the Philippines unless
the docking or stopping at any other Philippine port is for the purpose of unloading passengers
and/or cargoes that originated form abroad, or to load passengers and/or cargoes bound for abroad;
Provided, further, that if any portion of such fuel, goods or supplies is used for purposes other that
the mentioned in the paragraph, such portion of fuel, goods and supplies shall be subject to 12%
VAT;

Services of banks, non-bank financial intermediaries performing quasi-banking functions, and

other non-bank financial intermediaries, such as money changers and pawnshops, subject to
percentage tax under Sections 121 and 122, respectively of the Tax Code; and

Sale or lease of goods and services to senior citizens and persons with disabilities, as provided
under Republic Act Nos. 9994 (Expanded Senior Citizens Act of 2010) and 10754 (An Act
Expanding the Benefits and Privileges of Persons with Disability), respectively;

Transfer of property in merger or consolidation (pursuant to Section 40(C)(2) of the Tax Code, as
amended);

Association dues, membership fees, and other assessments and charges collected on a purely
reimbursement basis by homeowners’ associations and condominium established under Republic
Act No. 9904 (Magna Carta for Homeowners and Homeowner’s Association) and Republic Act
No. 4726 (The Condominium Act), respectively;

Sale of gold to the Banko Sentral ng Pilipinasn (BSP) (previously zero-rated transaction);

Sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension (beginning
on January 1, 2019 as determined by the Department of Health); and

Sale or lease of goods or properties or the performance of services other than the transactions
mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the
amount of Three Million Pesos (Php 3,000,000.00). Note: Self-employed individuals and
professionals availing of the 8% on gross sales and/or receipts and other non-operating income,
under Sections 24 (A)(2)(b) and 24 (A)(2)(c)(2) of the NIRC shall also be exempt from the
payment of twelve (12%) VAT.

What is the difference between a low-cost and a socialized housing?

“Low-cost housing” refers to housing projects intended for homeless low-income family
beneficiaries, undertaken by the Government or private developers, which may either be a
subdivision or a condominium registered and licensed by the Housing and Land Use Regulatory
Board/Housing (HLURB) under BP Blg. 220, PD No. 957 or any other similar law, wherein the
unit selling price is within the selling price per unit as set by the Housing and Urban Development
Coordinating Council (HUDCC) pursuant to RA No. 7279 otherwise known as the “Urban
Development and Housing Act of 1992” and other laws.

“Socialized housing” refers to housing programs and projects covering houses and lots or home
lots only undertaken by the Government or private sector for the underprivileged and homeless
citizens which shall include sites and services development, long-term financing, liberated terms
on interest payments, and such other benefits in accordance with the provision or RA No. 7279,
otherwise known as the “Urban Development and Housing Act of 1992” and RA No. 7835 and RA
No. 8763. It shall also refer to projects intended for the underprivileged and homeless wherein the
housing package selling price is within the lowest interest rates under the Unified Lending
Program (UHLP) or any equivalent housing program of the Government, the private sector or
non-government organizations.

II. RELIEF-Related Queries

What is "RELIEF"?

RELIEF means Reconciliation of Listing for Enforcement. It supports the third party information
program of the Bureau through the cross referencing of third party information from the taxpayers'
Summary Lists of Sales and Purchases prescribed to be submitted on a quarterly basis.

Who are required to submit Summary List of Sales?

VAT taxpayers with quarterly total sales/receipts (net of VAT), exceeding Two Million Five
Hundred Thousand Pesos (P2,500,000.00) are required to submit a Summary List of Sales.

Who are required to submit Summary List of Purchases?

VAT taxpayers with quarterly total purchases (net of VAT) of goods and services, including
importation exceeding One Million Pesos (P1,000,000.00) are required to submit Summary List of
Purchases.

What are the Summary Lists required to be submitted?

Quarterly Summary List of Sales to Regular Buyers/ Customers Casual Buyers/ Customers and
Output Tax
Quarterly Summary of List of Local Purchases and Input tax; and
Quarterly Summary List of Importation.
When is the deadline for submission of the above Summary Lists?

The Summary List of Sales/Purchases, whichever is applicable, shall be submitted on or before the
twenty-fifth (25th) day of the month following the close of the taxable quarter -- calendar quarter
or fiscal quarter.
What are the penalties for failure to submit the Summary Lists?

For failure to file, keep or supply a statement, list or information required on the date prescribed
shall pay and administrative penalty of One Thousand Pesos (P1,000.00) for each such failure,
unless it is shown that such failure is due to reasonable cause and not to willful neglect; and
An aggregate amount to be imposed for all such failures during a taxable year shall not exceed
Twenty-Five Thousand Pesos (P25,000.00).
III. What is the treatment for Withholding of VAT on Government Money Payments?

The government or any of its political subdivisions, instrumentalities or agencies, including

government-owned or controlled corporations (GOCCs) shall, before making payment on account
of each purchase of goods and/or services taxed at twelve percent (12%) VAT pursuant to Sections
106 and 108 of the Tax Code, deduct and withhold a Final VAT due at the rate of five percent (5%)
of the gross payment.

The five percent (5%) final VAT withholding rate shall represent the net VAT payable of the seller.
The remaining seven percent (7%) effectively accounts for the standard input VAT for sales of
goods or services to government or any of its political subdivisions, instrumentalities or agencies
including GOCCs in lieu of the actual input VAT directly attributable or ratably apportioned to
such sales. Should actual input VAT attributable to sales to government exceed seven percent (7%)
of gross payments, the excess may form part of the sellers' expense or cost. On the other hand, if
actual input VAT attributable to sale to government is less than seven percent (7%) of gross
payment, the difference must be closed to expense or cost.

The government or any of its political subdivisions, instrumentalities or agencies including

GOCCs, as well as private corporation, individuals, estates and trusts, whether large or non-large
taxpayers, shall withhold twelve percent (12%) VAT with respect to the following payments:

Lease or use of properties or property rights owned by non-residents; and

Other services rendered in the Philippines by non-residents.

IV. In what grounds can the Commissioner of Internal Revenue suspend the business operations
of a taxpayer?

The Commissioner or his authorized representative is empowered to suspend the business

operations and temporarily close the business establishment of any person for any of the following
violations:

In the case of a VAT-registered Person:

Failure to issue receipts or invoices;

Failure to file a value-added-tax return as required under Section 114; or

Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct taxable
sales or receipts for the taxable quarter.

Failure to any Person to Register as Required under Section 236

The temporary closure of the establishment shall be for the duration of not less than five (5) days
and shall be lifted only upon compliance with whatever requirements prescribed by the
Commissioner in the closure order.