A Guide to

Business Taxes
In the Philippines
By Jose Mari Gimenez
BUSLAW3 K32

Objectives
To know what are the different

business taxes
To know each of their specialties
To know the rates
To know how it is used in business

Value-Added Tax (VAT)

Any person who sells, barters or exchanges

goods or properties in the course or trade

or business shall be subject to VAT.
it is a tax on consumption levied on the
sale, barter, exchange or lease of goods or
properties and services in the Philippines
It is an indirect tax, which may be shifted or
passed on to the buyer.
Tax Rates
12%, if domestic sale;
0%, if export sale.

Value-Added Tax (VAT)

VAT can be found in everyday activities

such as receipts and invoices from

purchases and sales.

The Types Of VAT

Input tax is the VAT due on or paid by a VATregistered 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.

Output tax is 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.

12% Tax Rate on VAT

The right or

privilege to use in
the Philippines of
any industrial,
commercial or
scientific
equipment.
The right or
privilege to use
motion picture films,
tapes and discs.

Real properties held primarily for

sale to customers or held for lease

in the ordinary course of trade or
business.
The right or privilege to use patent,

copyright, design or model, plan,

secret formula or process, goodwill,
trademark, trade brand or other like
property or right.

0% Tax Rate on VAT

Export sales,

especially sale of
raw materials and
sale of gold

Services performed in the

Philippines by VAT-registered
persons
Sale or importation of agricultural

and marine food products

Importation of household and

personal items

VAT-Exempted
Individuals pursuant to an

employer-employee relationship
Educational services
Agricultural contract growers
milling for others

Value-Added Tax (VAT)

Computation for VAT on sale of services
Output taxes (sellers VAT on sales)
Less: Input taxes (sellers VAT paid on purchases)
VAT payable of seller

Computation for VAT on sale of goods

Output taxes (sellers VAT on sales)
Less: Input taxes (sellers VAT paid on purchases)
VAT payable of seller

Persons eligible for VAT

Persons required to
register
as
VAT
taxpayer but failed to
register previously.
Persons who engages
in importation of goods
and
is engage in
trade / business.
Persons or entities who
engages in business
with actual gross sales
or receipts exceeding
P1,919,500.00.

Other Percentage Tax

Business who sell or lease goods,

properties or services in the course of

trade or business and are exempt from
value-added tax (VAT) under Section
109 (w) of the National Internal Revenue
Code, as amended, whose gross annual
sales and/or receipts do not exceed P
1,919,500 and who are not VATregistered

Other Percentage Tax

1. 3% percentage tax
2. Common carriers

tax on domestic
carriers
3. Common carriers
tax on international
carriers
4. Franchise tax
5. Overseas
communications
tax

6. Tax on banks and

non-bank financial
intermediaries
performing
quasi-banking
functions
7. Amusement tax
8. Tax on winnings
9. Stock transaction
tax

Excise Tax
A tax on the

production, sale or
consumption of a
commodity in a country.
Applicable to On goods
manufactured or
produced in the
Philippines for domestic
sale or consumption or
for any other
disposition.
Applicable for goods
imported.

Excise Tax
Specific Tax

the excise tax imposed which is

based on weight or volume
capacity or any other physical
unit of measurement

Ad Valorem Tax

the excise tax which is based on

selling price or other specified
value of the goods/articles