>> Value-Added Tax: Input VAT << RR No.

7-2024
ORs are considered supplementary
Requisites: (TRIAD) documentation which is not valid proof. Such
1. Transaction issuance starting 4/27/24, will be penalized as a
2. Registration failure to issue VAT Invoice.
Input tax credit on the importation of To convert remaining ORs to Invoices:
goods and local purchase of goods, properties, 1. Strike through the phrase “Official Receipt”
or services by a VAT-registered person shall be and stamp “Invoice” (allowed until
creditable: 12/31/2024, may be extended)
 To the importer, upon payment of VAT prior 2. Submit an inventory of unused receipts
to the release of goods from customs indicating the number of booklets and serial
custody; numbers on or before 5/27/2024.
 To the purchaser of the domestic goods or
properties upon consummation of sale; or Transaction Documentation
 To the purchaser of services or the lessee or Import entry, or other equivalent
Importation of
licensee upon payment of the document showing actual
goods
compensation payment of VAT on the goods
Purchase of Real Public instrument together with
3. In the course of business Property VAT invoice issued by the seller
Purchase or importation of goods:
 For sale,
 For conversion into or intended to form part >> Special Rules <<
of a finished product or sale including
packaging mats, >> Capital Goods
 For use as supplies in the course of business Goods/properties with est. useful life grater
 For use as mats supplied in the sale of than 1 year, treated as depreciable assets.
service Rqsts:
 For use in trade or business, for which 1. Aggregate acqui cost for depreciable CG,
deduction for depreciation or amortization excluding VAT, >P1M
is allowed under the Tax Code. 2. In one calendar month, whose VAT will be
spread evenly over its useful life (maximum
4. Attribution of 60 months)
A VAT-registered person who is also > 1M </= 1M
engaged in transactions NOT subject to VAT shall IVAT spread for 60
be allowed to tax credit as follows: >/= 5 yrs
months
 Total input tax that can be directly Full IVAT on
> 1 yr, < 5 IVAT spread evenly
attributed to transactions subject to VAT month of
yrs throughout useful life
 A ratable portion of any input tax which acquisition
Full IVAT on month of
cannot be directly attributed to either </= 1 yr
acquisition
activity
> Shall only be allowed until 12/31/21, after which
5. Documentation
those with unutilized IVAT shall be allowed to apply the
Prior to EOPT, VAT invoice is for goods
sale as scheduled until fully utilized. <
or properties. VAT Official Receipt (OR) is for
the lease of goods or properties, and for
services.
>> Vehicles
According to EOPT, VAT Invoice is the
General Rule:
only evidence needed for every transaction.
Only 1 vehicle for land transport is allowed for
the use of an employee, with value of </= P2.4M
Exception:
 Main line of business is transport operations or
lease of transpo equipment, where the vehicles
purchased are used in said operations. >> Standard Input VAT
Sales to the gov’t, except GOCCs
>> Construction in Progress (CIP) Rate: 7% of selling price
Considered as purchase of service, the value (Not applicable, since 1/1/2021)
which shall be determined based on the progress (Replaced with withholding VAT no. 5)
billings.
If only the labor will be supplied by the >> Withholding VAT
contractor, and the materials will be purchased by the  Lease or use of properties or property rights
contractee from other suppliers: owned by non-residents.
- Labor: on the month the payment was  Other services rendered by non-residents.
made based on progress billings (Since the seller came from outside the PH,
- Purchase of materials: purchase date their payment of VAT to PH is uncertain. The
buyer, which is a resident, then handles the
VAT payment as well as adding such VAT %
>> Special Forms << in the purchase price.)
 Service fees paid to foreign companies or
>> Transitional Input VAT individuals if the source of that income is
Applicable to a person who becomes liable to within the PH (Final WVAT)
VAT or any person who elects to be a VAT-registered - If the service provider is outside PH, such
person. (From non-registered to VAT-registered; those service is utilized or consumed for a
who start a business and becomes VAT-registered) recipient within the PH.
 Substituted VAT return
Amount is, whichever is higher: (Seller does not want to record Input VAT
a. 2% value of such beg. inv. of goods, materials, and subsequently go to BIR for the VAT
and supplies return. Buyer will be the one to pay, record
b. Actual VAT paid on such goods, materials, and such VAT, and give the VAT return to BIR.)
supplies  Sales to government (5% Creditable WVAT)

>> Presumptive Input VAT

Persons or firms engaged in the processing or
manufacturing of: (SaMaMi Co PaRe) >> VAT: Compliance Requirements <<
1. Sardines,
2. Mackerel >> Invoicing Requirements
3. Milk 1. Statement that the seller is a VAT-registered
4. Cooking oil person followed by the seller’s TIN and branch
5. Packed noodle-based instant meals code (VAT Reg Tin 123-456-789-00000)
6. Refined sugar (The last zeroes may indicate what branch the
seller is. If last number is 0, it is the main. If 1, it
Amount: 4% of the gross value in money of their is the 2nd branch. And so on…)
purchases, if primary agricultural products used are 2. Total amount which the purchaser pays or is
used as inputs to their production. obligated to pay to the seller with the indication
that such amount includes the VAT, proved that:
Rationale: 2.1. VAT amount is shown as a separate item;
There is OVAT in the sale of such products, 2.2. The term “Vat-Exempt Sale” is written or
though the raw materials, which were listed above, are printed, if it is exempt;
VAT exempt. The government then specifically gave 2.3. The term “Zero-Rated Sale” is written or
these an exception to ease the payment of VAT by giving printed, if it is subject to 0%;
them a deduction (instead of an expense as the nature 2.4. If a mixed transaction, the invoice shall
of VAT exempt payables). clearly indicate the breakdown of the sale
 price between of the sale price between 2. Quarterly VAT Declaration
taxable, exempt, and zero-rated BIR Form No. 2550Q
components and the calculation of VAT on Declaration: 25 days following the close of the
each portion. taxable quarter
3. Date of transaction, quantity, unit cost, and Cancellation of Registration:
description of goods/properties or nature of the 25 days from the date of cancellation
services;
4. In sales with an amount of P1,000 or more Place of filing: Place of registration
where the sale/transfer is made to a VAT- Those with multiple branches, only one
registered person, the registered name or name, consolidated return shall be filed for his principal place
address, and TIN of the purchases; and of business or head office and all branches.
5. Other information required under Sec. 6(B)
Attachment to 2550-Q
RMC No. 123-2022 & RR No. 6-2022 1. Summary List of Sales (SLS)
The 5-year validity period of the PTU and/or 2. Summary List of Purchases (SLP)
system-generated receipts/invoices are removed. 3. Summary List of Importation (SLI)
Phrases pertaining to such printed at the
bottom shall be disregarded and omitted. >> Short Period Return
Those who retire from business and whose VAT
>> Erroneous VAT Invoice registration has been cancelled shall file a final
 If a person who is not a VAT-registered quarterly return and pay the tax due thereon within 25
person issues an invoice/receipt showing his days from the date of cancellation/retirement.
TIN, followed by the word “VAT” If such date falls on the 1st or 2nd month of the
a. The issuer shall, in addition to any quarter, the initial monthly VAT declaration shall be filed
liability to Percentage Tax, be liable to: within 20 days after the end of the month.
i. Output VAT, w/o any input tax
credit benefit >> Who are required to register?
ii. 50% surcharge 1. Gross sales for the past 12 months, other than
those exempt, >P3M.
b. The VAT shall be recognized as an input 2. Those who have reasonable grounds to believe
tax credit to the purchaser, if the other that their GS for the next 12 months, other than
requisite info is shown on the those exempt, will be >P3M.
invoice/receipt If they fail to register, they shall be liable to pay
the tax as if he were a VAT-registered person without
 If a VAT-registered person issues a VAT the benefit of input tax credits for the period in which he
Invoice for a VAT-exempt transaction but was not properly registered.
fails to display prominently on the invoice Any person not required to register may elect to
the term “VAT-Exempt sale,” the issuer shall register for VAT. They cannot cancel such registration
be liable to account for output tax, as if it is for the next 3 years!
not VAT-exempt transaction.
Summary:
>> VAT Returns > P3M MANDATORY
12% VAT
X
1. Monthly VAT Declaration RIT/RCIT
BIR Form No. 2550M
Declaration: 20th day of following month </= P3M OPTIONAL
eFPS filers: 21st to 25th day of the month 3% OPT, or
Transactions starting 1/1/2023, this form will 8% IT option, or 3% OPT + RIT/RCIT |
be optional and not required. NO VAT/OPT + 8% IT 12% VAT, or
12% VAT + RIT/RCIT
*OPT = Other Percentage Tax
>> Cancellation of Registration
a. Written application and demonstration to the
CIR’s satisfaction that his GS for the following
months, other than those exempt, will NOT
EXCEED P3M.
b. Cessation of the trade or business, not
expecting to recommence any trade or business
within the next 12 months.