Professional Documents
Culture Documents
Value-Added Tax (VAT) is a form of sales tax. It is a tax on consumption levied on the sale, barter,
exchange or lease of goods or properties and services in the Philippines and on importation of goods into
the Philippines. It is an indirect tax, which may be shifted or passed on to the buyer, transferee or lessee of
goods, properties or services.
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Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases
goods or properties and renders services subject to VAT, if the aggregate amount of actual gross
sales or receipts exceed Three Million Pesos (Php3,000,000.00)
A person required to register as VAT taxpayer but failed to register
Any person, whether or not made in the course of his trade or business, who imports goods
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BIR Form 2550M - Monthly Value-Added Tax Declaration (February 2007 ENCS)
Documentary Requirements
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307), if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at
Source (SAWT), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Authorization letter, if return is filed by authorized representative.
Procedures
1. Fill-up BIR Form No. 2550M in triplicate copies (two copies for the BIR and one copy for the
taxpayer).
2. If there is payment:
o File the Monthly VAT declaration, together with the required attachments, and pay the VAT
due thereon with any Authorized Agent Bank (AAB) under the jurisdiction of the Revenue
District Office (RDO)/Large Taxpayers District Office (LTDO) where the taxpayer (head
office of the business establishment) is registered.
o Accomplish and submit BIR-prescribed deposit slip, which the bank teller shall machine
validate as evidence that payment was received by the AAB. The AAB receiving the tax
return shall stamp mark the word "Received" on the return and machine validate the return
as proof of filing the return and payment of the tax.
o In places where there are no AAB, file the Monthly VAT declaration, together with the
required attachments and pay the VAT due with the Revenue Collection Officer (RCO)
o The RCO shall issue a Revenue Official Receipt upon payment of the tax.
3. If there is no payment:
o File the Monthly VAT Declaration, together with the required attachments, with the
RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent having jurisdiction
over the registered address of the taxpayer (head office of the business establishment).
Deadline
Manual Filing - Not later than the 20th day following the end of each month
Through Electronic Filing and Payment System (eFPS):
Group B
Manufacture and Repair of Furniture 24 days following the end of
Manufacture of Basic Metals the month
Manufacture of Chemicals and Chemical Products
Manufacture of Coke, Refined Petroleum & Fuel
Products
Manufacture of Electrical Machinery & Apparatus
N.E.C.
Manufacture of Fabricated Metal Products
Manufacture of Food, Products & Beverages
Manufacture of Machinery & Equipment NEC
Manufacture of Medical, Precision, Optical Instruments
Manufacture of Motor Vehicles, Trailer & Semi-Trailers
Manufacture of Office, Accounting & Computing
Machinery
Manufacture of Other Non-Metallic Mineral Products
Manufacture of Other Transport Equipment
Manufacture of Other Wearing Apparel
Manufacture of Paper and Paper Products
Manufacture of Radio, TV & Communication
Equipment/ Apparatus
Manufacture of Rubber & Plastic Products
Manufacture of Textiles
Manufacture of Tobacco Products
Manufacture of Wood & Wood Products
Manufacturing N.E.C.
Metallic Ore Mining
Non-Metallic Mining & Quarrying
Group C
Retail Sale 23 days following the end of
Wholesale Trade and Commission Trade the month
Sale, Maintenance, Repair of Motor Vehicle, Sale of
Automotive Fuel
Collection, Purification and Distribution of Water
Computer and Related Activities
Real Estate Activities
Group D
Air Transport 22 days following the end of
Electricity, Gas, Steam & Hot Water Supply the month
Postal & Telecommunications
Publishing, Printing & Reproduction of Recorded Media
Recreational, Cultural & Sporting Activities
Recycling
Renting of Goods & Equipment
Supporting & Auxiliary Transport Services
Group E
Activities of Membership Organizations, Inc. 21 days following the end of
Health and Social Work the month
Public Admin & Defense Compulsory Social Security
Research and Development
Agricultural, Hunting, and Forestry
Farming of Animals
Fishing
Other Service Activities
Miscellaneous Business Activities
Unclassified
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Quarterly Value-Added Tax Return
BIR Form No. 2550Q - Quarterly Value-Added Tax Return (February 2007 ENCS)
Documentary Requirements
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at
Source (SAWT), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Previously filed return and proof of payment, for amended return
6. Authorization letter, if return is filed by authorized representative
Procedures
Fill-up BIR Form 2550Q in triplicate copies (two copies for the BIR and one copy for the taxpayer)
1. If there is payment:
o File the Monthly VAT declaration, together with the required attachments, and pay the VAT
due thereon with any Authorized Agent Bank (AAB) under the jurisdiction of the Revenue
District Office (RDO)/Large Taxpayers District Office (LTDO) where the taxpayer (head
office of the business establishment) is registered.
o Accomplish and submit BIR-prescribed deposit slip, which the bank teller shall machine
validate as evidence that payment was received by the AAB. The AAB receiving the tax
return shall stamp mark the word "Received" on the return and machine validate the return
as proof of filing the return and payment of the tax.
o In places where there are no AAB, file the Monthly VAT declaration, together with the
required attachments and pay the VAT due with the Revenue Collection Officer (RCO)
o The RCO shall issue a Revenue Official Receipt upon payment of the tax.
2. If there is no payment:
o File the Quarterly VAT Return, together with the required attachments with the
RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent having jurisdiction over
the registered address of the taxpayer (head office of the business establishment).
Reminders:
Only one consolidated Monthly VAT Declaration/Quarterly VAT Return shall be filed covering the
results of operation of the head office as well as the branches for all lines of business subject to
VAT.
The Quarterly Summary Lists of Sales and Purchases shall be submitted in Compact Disk-
Recordable (CDR) following the format provided under Section 4.114-3(g) of RR No. 16-2005, as
amended by RR No. 1-2012.
The Quarterly Summary Lists of Sales and Purchases shall be submitted through electronic filing
facility for taxpayers under the jurisdiction of the Large Taxpayers Service (LTS) and those enrolled
under the eFPS.
Deadline
Within twenty five (25) days following the close of the taxable quarter.
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On sale of goods and properties - twelve percent (12%) of the gross selling price or gross value
in money of the goods or properties sold, bartered or exchanged
On sale of services and use or lease of properties - twelve percent (12%) of gross receipts
derived from the sale or exchange of services, including the use or lease of properties
On importation of goods - twelve percent (12%) based on the total value used by the Bureau of
Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and
other charges, such as tax to be paid by the importer prior to the release of such goods from
customs custody; provided, that where the customs duties are determined on the basis of quantity
or volume of the goods, the VAT shall be based on the landed cost plus excise taxes, if any.
On export sales and other zero-rated sales - 0%
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Codal Reference
Title IV, Sections 105 to 115 of the National Internal Revenue Code of 1997, as amended
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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:
a. 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
b. 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?
a. Pay the annual registration fee of P500.00 for every place of business or establishment that
generates sales;
b. Register the books of accounts of the business/occupation/calling, including practice of profession,
before using the same;
c. 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);
d. 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);
e. 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?
a. 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.
b. 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.
c. 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).
d. 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?
a. 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
b. 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.
The cancellation for registration will be effective from the first day of the following month the cancellation
was approved.
a. A VAT invoice for every sale, barter or exchange of goods or properties; and
b. 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.
The amount of the tax shall be shown as a separate item in the invoice or receipt.
Sample:
What is the information that must be contained in the VAT invoice or VAT official receipt?
1. Name of Seller
2. Description of the goods or properties or nature of the service
3. Unit cost
4. Quantity
5. Date of transaction
6. TIN of buyer, if VAT- registered and amount exceeds P1,000.00
7. Address of Buyer
8. Business Style of Buyer
9. Name of Buyer
10. Statement that the seller is a VAT-registered person, followed by his TIN
11. Business Address of the Seller
12. Business Style of the Seller
13. Purchase price plus the VAT, provided that
o The amount of tax shall be shown as a separate item in the invoice or receipt;
o If the sale is exempt from VAT, the term "VAT-EXEMPT SALE" shall be written or printed
prominently on the invoice or receipt;
o 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
o 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.
14. 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.
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.
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.
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.
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"? (RP-EMT)
The term "goods or properties" shall mean all tangible and intangible objects, which are capable of pecuniary
estimation and shall include, among others:
a. Real properties held primarily for sale to customers or held for lease in the ordinary course of trade or
business;
b. 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;
c. The right or privilege to use in the Philippines of any industrial, commercial or scientific equipment;
d. The right or the privilege to use motion picture films, films, tapes and discs; and
e. Radio, television, satellite transmission and cable television time.
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:
a. 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;
b. The lease or the use of, or the right to use of any industrial, commercial or scientific equipment;
c. The supply of scientific, technical, industrial or commercial knowledge or information;
d. 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;
e. 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;
f. 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;
g. The lease of motion picture films, films, tapes and discs; and
h. The lease or the use of or the right to use radio, television, satellite transmission and cable television time.
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.
The following services performed in the Philippines by VAT-registered person shall be subject to zero percent (0%)
rate:
a. 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);
b. 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);
c. 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;
d. 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);
e. 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;
f. 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
g. 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:
a. Export sales
1. 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);
2. 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;
3. The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales
exceed seventy percent (70%) of total annual production;
4. Transactions considered export sales under Executive Order No. 226, otherwise known as the
Omnibus Investments Code of 1987, and other special laws; and
5. 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.
b. 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%)?
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%)?
1. 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;
2. The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales exceed
seventy percent (70%) of total annual production;
3. Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus
Investments Code of 1987, and other special laws
4. 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
5. 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.
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;
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.
a. 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;
b. 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);
c. 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;
d. 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.
e. Services subject to percentage tax under Title V of the Tax Code, as amended;
f. Services by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar
cane into raw sugar;
g. Medical, dental, hospital and veterinary services except those rendered by professionals;
h. 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;
i. Services rendered by individuals pursuant to an employer-employee relationship;
j. 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;
k. 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;
l. 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;
m. Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered and in good
standing with the Cooperative Development Authority;
n. 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;
o. Export sales by persons who are not VAT-registered;
p. The following sales of real properties:
i. Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course
of trade or business.
ii. 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;
iii. 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;
iv. 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.)
q. 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);
r. 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;
s. Transport of passengers by international carriers;
t. 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);
u. 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;
v. 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
w. 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;
x. Transfer of property in merger or consolidation (pursuant to Section 40(C)(2) of the Tax Code, as amended);
y. 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;
z. Sale of gold to the Banko Sentral ng Pilipinasn (BSP) (previously zero-rated transaction);
aa. 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
bb. 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.
“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.
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.
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.
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.
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.
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:
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:
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