TAXATION II

Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the
sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro
sales and other forms of conditional sale.

Documentary Stamp Tax is a tax on documents, instruments, loan agreements and papers evidencing
the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto.

Donor's Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between
two or more persons who are living at the time of the transfer.

Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs
and beneficiaries at the time of death and on certain transfers which are made by law as equivalent to
testamentary disposition.

Income Tax is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on
a person’s income, emoluments, profits and the like.

Percentage Tax is a business tax imposed on persons or entities who sell or lease goods, properties or
services in the course of trade or business whose gross annual sales or receipts do not exceed P550,000
and are not VAT-registered.

Value Added Tax is a business tax imposed and collected from the seller in the course of trade or
business on every sale of properties (real or personal) lease of goods or properties (real or personal) or
vendors of services. It is an indirect tax, thus, it can be passed on to the buyer.

Withholding Tax on Compensation is the tax withheld from individuals receiving purely compensation
income.

Expanded Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is
creditable against the income tax due of the payee for the taxable quarter year.

Final Withholding Tax is a kind of withholding tax which is prescribed only for certain payors and is not
creditable against the income tax due of the payee for the taxable year. Income Tax withheld constitutes
the full and final payment of the Income Tax due from the payee on the said income.

Withholding Tax on Government Money Payments is the withholding tax withheld by government
offices and instrumentalities, including government-owned or controlled corporations and local
government units, before making any payments to private individuals, corporations, partnerships and/or
associations.

DONOR’S TAX
Tax Rates effective January 1, 1998 to present
The Tax
Net Gift Over But not Over Plus Of the Excess Over
Shall be

100,000.00 exempt

100,000.00 200,000.00 0 2% 100,000.00

200,000.00 500,000.00 P 2,000.00 4% 200,000.00

500,000.00 1,000,000.00 14,000.00 6% 500,000.00

1,000,000.00 3,000,000.00 44,000.00 8% 1,000,000.00

3,000,000.00 5,000,000.00 204,000.00 10% 3,000,000.00

5,000,000.00 10,000,000.00 404,000.00 12% 5,000,000.00

 10,000,000.00 and over 1,004,000.00 15% 10,000,000.00
Notes:
1. Rate applicable shall be based on the law prevailing at the time of donation.
2. When the gifts are made during the same calendar year but on different dates, the donor's tax
computed on the total net gifts during the year.
Donation made to a stranger is subject to 30% of the net gift. A stranger is a person who is not a:
• brother, sister (whether by whole or half blood), spouse, ancestor and lineal descendants; or
•. relative by consanguinity in the collateral line within the fourth degree of relationship (up to first
cousin).

Description
Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between
two or more persons who are living at the time of the transfer. It shall apply whether the transfer is in
trust or otherwise, whether the gift is direct or indirect and whether the property is real or personal,
tangible or intangible.

Tax Form
BIR Form 1800 – Donor’s Tax Return

Documentary Requirements
The following requirements must be submitted upon field or office audit of the tax case before the Tax
Clearance Certificate/Certificate Authorizing Registration can be released:
1. Deed of Donation
2. Sworn Statement of the relationship of the donor to the donee
3. Proof of tax credit, if applicable
4. Certified true copy(ies) of the Original/Transfer/Condominium Certificate of Title (front and back )
of lot and/or improvement donated, if applicable
5. Certified true copy(ies) of the latest Tax Declaration (front and back pages) of lot and/or
improvement, if applicable
6. “Certificate of No Improvement” issued by the Assessor’s office where the properties have no
declared improvement, if applicable
7. Proof of valuation of shares of stocks at the time of donation, if applicable
• For listed stocks - newspaper clippings or certification issued by the Stock Exchange as to the
par value per share
• For unlisted stocks - latest audited Financial Statements of the issuing corporation with
computation of the book value per share
8. Proof of valuation of other types of personal properties, if applicable
9. Proof of claimed deductions, if applicable
10. Copy of Tax Debit Memo used as payment, if applicable
Additional requirements may be requested for presentation during audit of the tax case depending upon
existing audit procedures.

Procedures
File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with any Authorized
Agent Bank (AAB) of the RDO having jurisdiction over the place of the domicile of the donor at the time
of the transfer. In places where there are no AAB, the return will be filed directly with the Revenue
Collection Officer or duly Authorized City or Municipal Treasurer where the donor was domiciled at the
time of the transfer, or if there is no legal residence in the Philippines, with Revenue District No. 39 -
South Quezon City.

In the case of gifts made by a non-resident alien, the return may be filed with Revenue District No. 39 -
South Quezon City, or with the Philippine Embassy or Consulate in the country where donor is domiciled
at the time of the transfer.

Submit all documentary requirements and proof of payment to the Revenue District Office having
jurisdiction over the place of residence of the donor.
Deadlines
Within thirty days (30) after the date the gift (donation) is made. A separate return will be filed for each
gift (donation) made on the different dates during the year reflecting therein any previous net gifts
made during the same calendar year.

If the gift (donation) involves conjugal/community/property, each spouse will file separate returns
corresponding to his/ her respective share in the conjugal/community property. This rule will also apply
in the case of co-ownership over the property.

Related Revenue Issuances

RR No. 2-2003 and RMO No. 1-98

Codal Reference
Sec. 98 to Sec. 104 of the National Internal Revenue Code
Frequently Asked Questions
1. Who are required to file the Donor’s Tax Return?

Every person, whether natural or juridical, resident or non-resident, who transfers or causes to transfer
property by gift, whether in trust or otherwise, whether the gift is direct or indirect and whether the
property is real or personal, tangible or intangible.

2. What are the procedures in filing the Donor’s Tax return?

File the return in triplicate (two copies for the BIR and one copy for the taxpayer) with any Authorized
Agent Bank (AAB) of the RDO having jurisdiction over the place of the domicile of the donor at the time
of the transfer. In places where there are no AAB, the return will be filed directly with the Revenue
Collection Officer or duly Authorized City or Municipal Treasurer where the donor was domiciled at the
time of the transfer, or if there is no legal residence in the Philippines, with Revenue District No. 39 -
South Quezon City.

In the case of gifts made by a non-resident alien, the return may be filed with Revenue District No. 39 -
South Quezon City, or with the Philippine Embassy or Consulate in the country where donor is domiciled
at the time of the transfer.

Submit all documentary requirements and proof of payment to the Revenue District Office having
jurisdiction over the place of residence of the donor.

3. What donations are tax exempt?

• Dowries or donations made on account of marriage before its celebration or within one year
thereafter, by parents to each of their legitimate, recognized natural, or adopted children to the
extent of the first P10,000
• Gifts made to or for the use of the National Government or any entity created by any of its agencies
which is not conducted for profit, or to any political subdivision of the said Government
• Gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation,
institution, accredited non-government organization, trust or philantrophic organization or research
institution or organization, provided not more than 30% of said gifts will be used by such donee for
administration purposes
• Encumbrances on the property donated if assumed by the donee in the deed of donation
• Donations made to the following entities as exempted under special laws:
- Aquaculture Department of the Southeast Asian Fisheries Development Center of the Philippines
- Development Academy of the Philippines
- Integrated Bar of the Philippines
- International Rice Research Institute
- National Social Action Council
- Ramon Magsaysay Foundation
- Philippine Inventor’s Commission
 - Philippine American Cultural Foundation
- Task Force on Human Settlement on the donation of equipment, materials and services

4. What are the bases in the valuation of property?

If the gift is made in property, the fair market value at that time will be considered the amount of gift.

In case of real property, the taxable base is the fair market value as determined by the Commissioner of
Internal Revenue (Zonal Value) or fair market value as shown in the latest schedule of values of the
provincial and city assessor (MV per Tax Declaration), whichever is higher.

If there is no zonal value, the taxable base is the fair market value that appears in the latest tax
declaration.

If there is an improvement, the value of improvement is the construction cost per building permit and or
occupancy permit plus 10% per year after year of construction, or the market value per latest tax
declaration.

ESTATE TAX

Tax Rates effective January 1, 1998 up to Present

If the Net Estate is:

The Tax
Over But not Over Plus Of the Excess Over
Shall be

P 200,00.00 Exempt

P200,000.00 500,000.00 0 5% P 200,000.00

500,000.00 2,000,000.00 P 15,000.00 8% 500,000.00

2,000,000.00 5,000,000.00 135,000.00 11% 2,000,000.00

5,000,000.00 10,000,000.00 465,000.00 15% 5,000,000.00

10,000,000.00 1,215,000.00 20% 10,000,000.00

BIR Form 1801 - Estate Tax Return

Description

Estate Tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs
and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to
testamentary disposition. It is not a tax on property. It is a tax imposed on the privilege of transmitting
property upon the death of the owner. The Estate Tax is based on the laws in force at the time of death
notwithstanding the postponement of the actual possession or enjoyment of the estate by the
beneficiary.
Tax Form

BIR Form 1801 - Estate Tax Return

Documentary Requirements
1. Notice of Death duly received by the BIR, if gross estate exceeds P20,000 for deaths occurring on or
after Jan. 1, 1998; or if the gross estate exceeds P3,000 for deaths occurring prior to January 1, 1998
2. Certified true copy of the Death Certificate
3. Deed of Extra-Judicial Settlement of the Estate, if the estate is settled extra judicially
4. Court Orders/Decision, if the estate is settled judicially;
5. Affidavit of Self-Adjudication and Sworn Declaration of all properties of the Estate
6. A certified true copy of the schedule of partition of the estate and the order of the court approving
the same, if applicable
7. Certified true copy(ies) of the Transfer/Original/Condominium Certificate of Title(s) of real
property(ies) (front and back pages), if applicable
8. Certified true copy of the latest Tax Declaration of real properties at the time of death, if applicable
9. "Certificate of No Improvement" issued by the Assessor's Office declared properties have no declared
improvement or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees
10. Certificate of Deposit/Investment/Indebtedness owned by the decedent and the surviving spouse, if
applicable
11. Photo copy of Certificate of Registration of vehicles and other proofs showing the correct value of
the same, if applicable
12. Photo copy of certificate of stocks, if applicable
13. Proof of valuation of shares of stocks at the time of death, if applicable
o For listed stocks - newspaper clippings or certification from the Stock Exchange
o For unlisted stocks - latest audited Financial Statement of issuing corporation
with computation of book value per share
14. Proof of valuation of other types of personal property, if applicable
15. Proof of claimed tax credit, if applicable
16. CPA Statement on the itemized assets of the decedent, itemized deductions from gross estate and
the amount due if the gross value of the estate exceeds two million pesos, if applicable
17. Certification of Barangay Captain for claimed Family Home
18. Duly notarized Promissory Note for "Claims against the Estate" arising from Contract of Loan
19. Accounting of the proceeds of loan contracted within three (3) years prior to death of the decedent
20. Proof of the claimed "Property Previously Taxed"
21. Proof of claimed "Transfer for Public Use"
22. Copy of Tax Debit Memo used as payment, if applicable
Additional requirements may be requested for presentation during audit of the tax case depending upon
existing audit procedures.

Procedures
The Estate Tax Return (BIR Form 1801) shall be filed and payment be made with an Authorized Agent
Bank (AAB) of the Revenue District Office (RDO) having jurisdiction over the place of residence of the
decedent at the time of his/her death.
If there is no AAB within the residence of the decedent, the Estate Tax Return must be filed and the
payment made with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer of the
RDO having jurisdiction over the place of residence of the decedent.
If the required filer has no legal residence in the Philippines, the Estate Tax return shall be filed and paid
with:
(a) The Office of the Revenue District Officer, Revenue District Office No. 39, South Quezon City; or
(b) The Philippine Embassy or Consulate in the country where decedent is residing at the time of his/her
death.

Deadlines
File the return within six (6) months from decedent's death. However, the Commissioner may, in
meritorious cases, grant extension not exceeding thirty (30) days.
The Estate Tax imposed shall be paid at the time the return is filed by the executor or administrator or
the heirs. However, when the Commissioner finds that payment on the due date of the Estate Tax or of
any part thereof would impose undue hardship upon the estate or any of the heirs, he may extend the
time for payment of such tax or any part thereof not to exceed five (5) years, in case the estate is settled
through the courts or two (2) years in case the estate is settled extra-judicially.
Extension of Time of Filing:
When the Commissioner finds that the payment of the estate tax or of any part thereof would imposed
undue hardship upon the estate or any of the heirs, he may extend the time for payment of such tax or
any part thereof not to exceed five (5) years in case the estate is settled through the courts, or two (2)
years in case it settled extra-judicially.
Where the request for extension is by reason of negligence, intentional disregard of rules and
regulations, or fraud on the part of the taxpayer, no extension will be granted by the Commissioner.
If an extension is granted, the Commissioner or his duly authorized representative may require the
executor, or administrator, or beneficiary, as the case may be, to furnish a bond in such amount, not
exceeding double the amount, not exceeding double the amount of tax and with such sureties as the
Commissioner deems necessary, conditioned upon the payment of the said tax in accordance in the
terms of extension.
The request for extension shall be filed with the Revenue District Officer (RDO) where the estate is
required to secure its TIN and file the estate tax return. The application shall be approved by the
Commissioner or his duly authorized representative.

Related Revenue Issuances

RR No. 2-2003, RMO No. 26-82, RMO No. 31-82, RMC No. 1-98,

Codal Reference
Sec. 84 to Sec. 97 of the National Internal Revenue Code

Frequently Asked Questions

1. Who are required to file the Estate Tax return?
a) The executor or administrator or any of the legal heirs of the decedent or non-resident of the
Philippines under any of the following situation:
- In all cases of transfer subject to Estate Tax;
- Where though exempt from Estate Tax, the gross value of the estate exceeds two hundred thousand P
200,000.00; and
- Where regardless of the gross value, the estate consists of registered or registrable property such as
real property, motor vehicle, share of stocks or other similar property for which a clearance from the
Bureau of Internal Revenue (BIR) is required as a condition precedent for the transfer of ownership
thereof in the name of the transferee.
b) Where there is no executor or administrator appointed, qualified and acting within the Philippines,
then any person in actual or constructive possession of any property of the decedent must file the
return.
c) The Estate Tax imposed under the Tax Code shall be paid by the executor or administrator before the
delivery of the distributive share in the inheritance to any heir or beneficiary. Where there are two or
more executors or administrators, all of them are severally liable for the payment of the tax. The estate
tax clearance issued by the Commissioner or the Revenue District Officer (RDO) having jurisdiction over
the estate, will serve as the authority to distribute the remaining/distributable properties/share in the
inheritance to the heir or beneficiary.
d) The executor or administrator of an estate has the primary obligation to pay the estate tax but the
heir or beneficiary has subsidiary liability for the payment of that portion of the estate which his
distributive share bears to the value of the total net estate. The extent of his liability, however, shall in
no case exceed the value of his share in the inheritance.

2. What are the procedures in the filing of the Estate Tax Return and payment of the corresponding
taxes?
a) The Estate Tax Return (BIR Form 1801) shall be filed and payment made with an Authorized Agent
Bank (AAB) of the Revenue District Office (RDO) having jurisdiction over the place of residence of the
decedent at the time of his/her death.
b) If there is no AAB within the residence of the decedent, the Estate Tax Return must be filed and the
payment made with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer of the
RDO having jurisdiction over the place of residence of the decedent.
c) If the required filer has no legal residence in the Philippines, the Estate Tax return will be filed and
payment be made with:
- The Office of the Revenue District Officer, Revenue District Office No. 39, South Quezon City; or
- The Philippine Embassy or Consulate in the country where decedent is residing at the time of his/her
death.
d) Submit all documentary requirements and proof of payment to the Revenue District Office having
jurisdiction over the place of residence of the decedent.
e) Payment of Estate tax by installment -In case the available cash of the estate is not sufficient to pay
its total estate tax liability, the estate may be allowed to pay the tax by installment and a clearance shall
be released only with respect to the property, the corresponding/computed tax on which has been paid.

3. What are included in gross estate?

• For resident alien decedents/citizens:
a) Real or immovable property, wherever located
b) Tangible personal property, wherever located
c) Intangible personal property, wherever located
• For non-resident decedent/non-citizens:
a) Real or immovable property located in the Philippines
b) Tangible personal property located in the Philippines
c) Intangible personal property - with a situs in the Philippines such as:
- Franchise which must be exercised in the Philippines
- Shares, obligations or bonds issued by corporations organized or constituted in the Philippines
- Shares, obligations or bonds issued by a foreign corporation 85% of the business of which is located in
the Philippines
- Shares, obligations or bonds issued by a foreign corporation if such shares, obligations or bonds have
acquired a business situs in the Philippines ( i. e. they are used in the furtherance of its business in the
Philippines)
- Shares, rights in any partnership, business or industry established in the Philippines

4. What are excluded from gross estate?

• GSIS proceeds/ benefits
• Accruals from SSS
• Proceeds of life insurance where the beneficiary is irrevocably appointed
• Proceeds of life insurance under a group insurance taken by employer (not taken out
upon his life)
• War damage payments
• Transfer by way of bona fide sales
• Transfer of property to the National Government or to any of its political subdivisions
• Separate property of the surviving spouse
• Merger of usufruct in the owner of the naked title
• Properties held in trust by the decedent
• Acquisition and/or transfer expressly declared as not taxable

5. What will be used as basis in the valuation of property?

• The properties subject to Estate Tax shall be appraised based on its fair market value at
the time of the decedent's death.
• The appraised value of the real estate shall be whichever is higher of the fair market
value, as determined by the Commissioner (zonal value) or the fair market value, as
shown in the schedule of values fixed by the Provincial or City Assessor.
• If there is no zonal value, the taxable base is the fair market value that appears in the
latest tax declaration.
• If there is an improvement, the value of improvement is the construction cost per
building permit or the fair market value per latest tax declaration.

6. What are the allowable deductions for Estate Tax purposes?

For Resident Decedent
• Expenses, losses, indebtedness and taxes
a) Funeral Expenses
i) CA 466 - 5 % of gross estate (up to Dec. 31, 1972)
ii) PD 69 - 5 % of gross estate but not exceeding P 50,000 (Jan. 1, 1973 to July 27, 1992)
iii) RA 7499 - 5 % of gross estate but not exceeding P 100,000 (July 28, 1992 to December 3l, 1997)
iv) RA 8424 - 5% of gross estate but not exceeding P 200,000 (Jan. 1,1998)
b) Judicial expenses of the testamentary/intestate proceedings
c) Valid claims against the estate
d) Claims against insolvent person
e) Unpaid mortgages/indebtedness
f) Unpaid taxes
g) Casualty losses
h) Property previously taxed or vanishing deductions
Requisites:
• Present decedent must have died within five (5) years from date of death of
prior decedent or date of gift
 • The property with respect to which the deduction is claimed must have formed
part of the gross estate situated in the Philippines of the prior decedent or
taxable gift of the donor
• The property must be identified as the same property received from prior
decedent or donor or the one received in exchange therefore
• The estate taxes on the transmission of the prior estate or the donors tax on the
gift must have been finally determined and paid
• No vanishing deduction on the property or the property given in exchange
therefore was allowed to the prior estate
i) Transfer for public purpose
j) Share of surviving spouse
k) Medical expenses - those incurred by the decedent within one (1) year prior to his/her death which
shall be substantiated with receipts
(NOTE: Amount allowable as deduction depends on the law prevailing at the time of death of the
decedent).
l) Family Home - fair market value but not to exceed P1,000,000.00
m) Standard Deduction - an amount equivalent to P1,000,000.00 (applicable only for death occurring
after the effectivity of RA 8424 which is January 1, 1998.)
n) Amount received by the heirs under Republic Act No. 4917 (applicable only for death occurring after
the effectivity of RA 8424 which is January 1, 1998)
For Non-Resident Decedent, not a citizen of the Philippines
• Expenses, losses, indebtedness, taxes
• Property previously taxed
• Transfer for public use
• Share in the conjugal property
Description
Percentage tax is a business tax imposed on persons or entities who sell or lease goods, properties or
services in the course of trade or business whose gross annual sales and/or receipts do not exceed
P750,000 and who are not VAT-registered.

Who Are Required To File Percentage Tax Returns

Any person who is not a VAT-registered person (persons exempt from VAT under Sec. 109z of the
Tax Code)

Domestic carriers and keepers of garages, except owners of bancas and owners of animal drawn
two- wheeled vehicle

Operators of international air and shipping carriers doing business in the Philippines
Franchise grantees of electric, gas or water utilities

Franchise grantees of radio and/or television broadcasting companies whose gross annual
receipts for the preceding year do not exceed Ten Million Pesos (P 10,000,000.00) and did not opt to
register as VAT taxpayers

Operators of communication equipment sending overseas dispatch, messages, or conversations

from the Philippines, except on services involving the following:
o Government of the Philippines - for messages transmitted by the Government of the Republic
of the Philippines or any of its political subdivisions and instrumentalities

o Diplomatic services - for messages transmitted by any embassy and consular offices of a
foreign government

o International organizations - for messages transmitted by a public international organization

or any of its agencies based in the Philippines enjoying privileges, exemptions and immunities
 which the government of the Philippine is committed to recognize pursuant to an international
agreement

o News Services - for messages from any newspaper, press association, radio or television
newspaper broadcasting agency, or newsticker services to any other newspaper, press
association, radio or television, newspaper, broadcasting agency or newsticker services, or to
bonafide correspondents, which messages deal exclusively with the collection of news items for,
or the dissemination of news items through public press, radio or television broadcasting or a
newsticker service furnishing a general news service similar to that of the public press
Banks and non-bank financial intermediaries and finance companies

Life insurance premiums

Agents of foreign insurance companies

Proprietor, lessee, or operator of cockpits, cabarets, night or day clubs, boxing exhibitions,
professional basketball games, jai-alai and race tracks

Every stock broker who effected a sale, barter, exchange or other disposition of shares of stock
listed and traded through the Local Stock Exchange (LSE) other than the sale by a dealer in securities

Corporate issuer / stock broker, whether domestic of foreign, engaged in the sale, barter,
exchange or other disposition through Initial Public Offering (IPO) seller in secondary public offering
of shares of stock in closely held corporations

Monthly Percentage Tax

Tax Form
BIR Form 2551 M - Monthly Percentage Tax Return

Documentary Requirements
1. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

2. Duly approved Tax Debit Memo, if applicable

3. Copy of Certificate of Registration issued by Cooperative Development Authority for

cooperatives and from the National Electrification Administration for electric cooperatives

4. Previously filed return and proof of payment, for amended return

Procedures
1. Fill-up BIR Form 2551 M in triplicate copies
2. If there is payment:
Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office
where taxpayer is required to register and present the duly accomplished BIR Form 2551
M, together with the required attachments and payment. (The Percentage Tax imposed
shall be paid at the time the return is filed by the taxpayer.)

In places where there are no AABs, the duly accomplished BIR Form 2551 M, together
with the required attachments and payment, shall be filed/paid with the Revenue
Collection Officer or duly Authorized Treasurer of the city or municipality where said
business or principal place of business is located.
 Receive taxpayer's copy of the duly stamped and validated form from the teller of the
AAB/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. If there is no payment:
Proceed to the Revenue District Office where taxpayer is required to register and present the
duly accomplished BIR Form 2551M, together with the required attachments.
Receive taxpayer's copy of the duly stamped and validated form from the RDO representative.
Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO, which shall
be paid at the concerned AAB.
Deadline

Manual Filing
Not later than 20th day following the end of each month
Filing Through Electronic Filing and Payment System (eFPS)
Group A - Twenty-Five (25) days following the end of the month
Group B - Twenty-Four (24) days following the end of the month
Group C - Twenty-Three (23) days following the end of the month
Group D - Twenty-Two (22) days following the end of the month
Group E - Twenty-One (21) days following the end of the month

Quarterly Percentage Tax

Tax Form
BIR Form 2551 Q - Quarterly Percentage Tax Return
Documentary Requirements

1. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

2. Duly approved Tax Debit Memo, if applicable

3. Copy of Certificate of Registration issued by Cooperative Development Authority for

cooperatives and from the National Electrification Administration for electric cooperatives

4. Previously filed return and proof of payment, for amended return

Procedures

1. Fill-up BIR Form 2551 Q in triplicate copies.

2. If there is payment:

Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where
taxpayer is required to register and present the duly accomplished BIR Form 2551Q,
together with the required attachments and payment. (The Percentage Tax imposed shall be
paid at the time the return is filed by the taxpayer.)

In places where there are no AABs, the accomplished BIR Form 2551 Q, together with the
required attachments and payment, shall be filed/paid with the Revenue Collection Officer
or duly Authorized Treasurer of the city or municipality where said business or principal
place of business is located.
 Receive taxpayer's copy of the duly stamped and validated form from the teller of the
AAB/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. If there is no payment:
• Proceed to the Revenue District Office where taxpayer is required to register and present
the duly accomplished BIR Form 2551Q, together with the required attachments.
• Receive taxpayer's copy of the duly stamped and validated form from the RDO
representative.
Note: "No payment" returns filed late shall be imposed the necessary penalties by the RDO,
which shall be paid at the concerned AAB.
Deadline
Manual Filing
Not later than 20th day following the end of each quarter
Filing Through Electronic Filing and Payment System (eFPS)
Not later than the 20th day following the end of the quarter

Percentage Tax For Transactions Involving Shares of Stocks Listed and Traded Through the Local Stock
Exchange or Through Initial and/or Secondary Offering
Tax Form

BIR Form 2552 - Percentage Tax Return (For Transactions Involving Shares of Stocks Listed and
Traded Through the Local Stock Exchange or Through Initial and/or Secondary Offering)
Documentary Requirements

1. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

2. Proof of Exemption for transactions not subject to tax, if applicable

3. Duly approved Tax Debit Memo, if applicable

4. Previously filed return and proof of payment, for amended return

Procedures

1. Fill-up BIR Form 2552 in triplicate copies.

2. If there is payment:
Proceed to the nearest Authorized Agents Banks (AABs) of the Revenue District Office
where the local stock exchange is located and present the duly accomplished BIR Form
2552, together with the required attachments and payment. (The Percentage Tax
imposed shall be paid at the time the return is filed by the taxpayer.)

Receive taxpayer's copy of the duly stamped and validated form from the teller of the
AAB

3. If there is no payment:
Proceed to the Revenue District Office where the local stock exchange is located and
present the duly accomplished BIR Form 2552, together with the required attachments.

Receive taxpayer's copy of the duly stamped and validated form from the RDO
representative.
 Note: "No payment" returns filed late shall be imposed the necessary penalties by the
RDO, which shall be paid at the concerned AAB.
Deadline

For tax on sale of shares of stocks listed and traded through the local stock exchange (LSE) –
within five (5) banking days from the date of collection

For tax on shares of stocks sold or exchanged through primary offering - within 30 days from
the date of listing in the LSE

For tax on shares of stocks sold or exchanged through secondary public offering
- within five (5) banking days from the date of collection

Tax Rates

Coverage Basis Tax Rate

Persons exempt from VAT under Gross Sales or Receipts 3%
Sec. 116
Domestic carriers and keepers of Gross Receipts 3%
garages
International Carriers:
International air/shipping carriers Gross Receipts 3%
doing business in the Philippines
Franchise Grantees:
Electric , gas and water utilities Gross Receipts 2%
Radio and television broadcasting Gross Receipts 3%
companies whose annual gross
receipts of the preceding year do
not exceed P 10,000,000 and did
not opt to register asVAT
taxpayer
Banks and non-bank financing Interest, commissions and
intermediaries discounts from lending activities
as well as income from leasing on
the basis of remaining maturities
of instruments:
• Short term maturity (not
5%
over 2 years)
• Medium term (over 2
years but not over 4 3%
years)
• Long Term Maturity
o Over 4 years but
1%
not over 7 years
o Over 7 years 0%
On Dividends 0%
On royalties, rentals of properties,
real or personal, profits from
exchange and all other items 5%
treated as gross income under
Sec. 32 of the Code
On interest, discounts and other
items of gross income paid to
Finance Companies finance companies and other 5%
financial intermediaries not
performing quasi banking
 functions
Interest, commissions and
discounts paid from their loan
transactions from finance
companies as well as income from
financial leasing shall be taxed
based on the remaining maturities
of instruments:
• Short term maturity (not
5%
over 2 years)
• Medium term (over 2
years but not over 4 3%
years)
• Long Term Maturity
o Over 4 years but
1%
not over 7 years
o Over 7 years 0%
Life Insurance Companies (except
purely cooperative companies or Total premiums collected 5%
associations)
Agents of foreign insurance
companies: (except reinsurance
premium)
Insurance agents
authorized under the
Insurance Code to procure
Total premium collected 10 %
policies of insurance for
companies not authorized to
transact business in the Phils.
Owners of property
obtaining insurance directly
Total premium collected 5%
with foreign insurance
companies
Proprietors, lessee or operator of
the following:
Cockpits Gross receipts 18%
Cabarets, Night or Day Clubs Gross receipts 18%
Boxing exhibitions Gross receipts 10%
Professional basketball games Gross receipts 15%
Jai-alai and race track (operators
Gross receipts 30%
shall withheld tax on winnings)
Every stock broker who effected
a sale, barter, exchange or other
Gross selling price or gross value
disposition of shares of stock
in money of shares of stocks sold,
listed and traded through the ½ of 1 %
bartered, exchanged or otherwise
Local Stock Exchange (LSE) other
disposed
than the sale by a dealer in
securities
A corporate issuer/stock broker,
Gross selling price or gross value
whether domestic of foreign,
of in money of shares of stocks
engaged in the sale, barter,
sold, bartered, exchanged or
exchange or other disposition
otherwise disposed in accordance
through Initial Public Offering
with the proportion of stocks
(IPO)/secondary public offering
sold, bartered or exchanged or
of shares of stock in closely held
after listing in the stock exchange
corporations
Up to 25 % 4%
Over 25% but not over 33
2%
1/3%
Over 33 1/3 % 1%
Related Revenue Issuances
RR No. 4-95, RR 7-95, RR No. 5-97, RR No. 2-98, RR No. 7-95, RR No. 6-2001, RR No. 12-2001, RR No. 4-
2002, RR No. 26-2002, RR No. 14-2003, RR No. 9-2004, RR No. 10-2004, RMC No. 6-2003, RMC No. 73-
2004

Codal Reference
Sections 116 to 128 of the National Internal Revenue Code
Description
Value-Added Tax is a form of sales tax. It is a tax on consumption levied on the sale of goods and
services and on the imports of goods into the Philippines. It is an indirect tax, which can be passed on to
the buyer.

Who Are Required To File VAT Returns

• Every person or entity who in the course of his trade or business, sells or leases goods,
properties and services subject to VAT, if the aggregate amount of actual gross sales or receipts
exceed One Million Five Hundred Thousand Pesos (P 1,500,000.00) for any twelve month period
• A person required to register as VAT taxpayer but failed to register
• A person who imports goods
• Professional practitioners
• Professional Practitioners (PPs) are formerly classified as non-VAT taxpayers and were exempt
from the Value-Added Tax and Percentage taxes under Section 109 of the National Internal
Revenue Code (hereinafter referred to as the Code), until December 31, 2002. Prior to this date,
they were subject only to Income Tax under Section 24 of the Code. Effective January 1, 2003,
however, by virtue of Republic Act Nos. 7716 and 9010, which were implemented by Revenue
Regulation Nos. 1-2003 and 3-2003, services of PPs are also subject to either VAT or 3%
Percentage Tax. Pursuant to Revenue Regulations No. 16-2005, services of Professional
Practitioners are subject to VAT if gross professional fees exceed P1,500,000.00 for a 12-month
period and subject to 3% Percentage Tax if gross professional fees total P1,500,000.00 and
below for a 12-month period.
"Professional Practitioners" include the following:
o Certified Public Accountants
o Insurance Agents (Life & Non-life)
o Other Professional Practitioners required to pass the government examination
o Others

Monthly VAT Declarations

Tax Form
BIR Form 2550 M - Monthly VAT Declarations
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 Compliance Certificate, if applicable

5. Authorization letter, if return is filed by authorized representative.

Procedures
1. Fill-up BIR Form 2550 M in triplicate copies.

2. If there is payment:
Proceed to the nearest Authorized Agents Banks (AAB's) of the Revenue District Office
(RDO)/ Large Taxpayers District Office (LTDO) where you are required to register and
 present the duly accomplished BIR Form 2550 M, together with the required
attachments and your payment.
In places where there are no AAB's, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where
you are required to register and present the duly accomplished BIR Form 2550 M,
together with the required attachments and your payment.
Receive your copy of the duly stamped and validated form from the teller of the
AAB's/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. If there is no payment:
Proceed to the Revenue District Office / Large Taxpayers District Office where you are
required to register and present the duly accomplished BIR Form 2550 M, together with the
required attachments.
Receive your copy of the duly stamped and validated form from the RDO representative
Deadline
Manual Filing
Not later than the 20th day following the end of each month
Filing Through eFPS
Group A - within twenty five (25) days following the end of the month
Group B - within twenty four (24) days following the end of the month
Group C - within twenty three (23) days following the end of the month
Group D - within twenty two (22) days following the end of the month
Group D - within twenty one (21) days following the end of the month

Quarterly VAT Returns

Tax Form
BIR Form 2550 Q - Quarterly VAT Return
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 Compliance Certificate, if applicable

5. Previously filed return and proof of payment, for amended return

6. Authorization letter, if return is filed by authorized representative

7. Summary List of Sales (if quarterly total Sales/Receipts (net of VAT) exceeds P 2,500,000) with
the following information:
a. BIR-registered name of the buyer who is engaged in business/exercise of profession;
b. Taxpayer Identification Number (TIN) of the buyer (Only for sales that are subject to
VAT);
c. Exempt Sales;
d. Zero-rates Sales;
e. Sales subject to VAT (exclusive of VAT)
f. Sales subject to Final VAT Withheld; and
g. Output Tax (VAT on Sales subject to 12%)
8. Summary List of Purchases (if quarterly total purchases (net of VAT) exceeds P 1,000,000)
with the following information:
a. BIR-registered name of the seller/supplier/service-provider;
b. Address of seller/supplier/service-provider;
c. Taxpayer Identification Number (TIN) of seller/supplier/service-provider
d. Exempt purchases;
e. Zero-rated purchases;
f. Purchases subject to VAT (exclusive of VAT) - on services;
g. Purchases subject to VAT (exclusive of VAT) - on capital goods;
h. Purchases subject to VAT (exclusive of VAT) - on goods other than capital goods
i. Purchases subject to Final VAT Withheld
j. Creditable Input Tax
 k. Non-creditable Input Tax

NOTE: Creditable input taxes and non-creditable input taxes are to be computed not on a
per supplier basis but on a per month basis.
9. The Quarterly Summary List of Importation with the following information:
a. Import Entry Declaration Number;
b. Assessment/Release Date;
c. Date of Importation;
d. Name of the Seller;
e. Country of Origin;
f. Dutiable Value;
g. All Charges Before Release from Customs Custody;
h. Landed Cost:
i. Exempt
j. Taxable (Subject to VAT)
k. VAT paid;
l. Official Receipt (OR) Number of the Official Receipt evidencing payment of tax; and
m. Date of VAT payment
Procedures
1. Fill-up BIR Form 2550 Q in triplicate copies.

2. If there is payment:

Proceed to the nearest Authorized Agents Banks (AAB's) of the Revenue District Office
/ Large Taxpayers District Office where you are required to register and present the duly
accomplished BIR Form 2550 Q with the required attachments and your payment.
In places where there are no AAB's, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office / Large
Taxpayers District Office where you are required to register and present the duly
accomplished BIR Form 2550 Q, together with the required attachments and your payment.
Receive your copy of the duly stamped and validated form from the teller of the
AAB's/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. If there is no payment:
Proceed to the Revenue District Office / Large Taxpayers District Office where you are
required to register and present the duly accomplished BIR Form 2550 Q, together with the required
attachments.
Receive your copy of the duly stamped and validated form from the RDO representative.

NOTE:
1. For taxpayers with branches, only one consolidated return shall be filed for the principal place of
business or head office and all the branches.

2. The Quarterly List of Sales and Purchases shall be submitted in magnetic form using 3.5-inch
floppy diskette following the format provided under Section 4.110-4 (Subsection G) of RR 8-2002.
3. The Quarterly List 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 taxable quarter of the taxpayer (for manual filing).
Within thirty (30) days following the close of taxable quarter of the taxpayer (for taxpayers under the
jurisdiction of the LTS and for filing through eFPS)

Tax Rates
For output tax (0% or 12%)
For input tax on importation of goods or local purchases of goods, properties or services,
including lease or use of properties, in the course of trade or business (0% or 12%)
 For creditable input tax on advance VAT payments made by the seller/owner of refined sugar and
importer/miller of wheat/flour (12%)

Related Revenue Issuances

RR No. 5-87-Regulations implementing the provisions of Title IV of the Tax Code imposing VAT on
importation of goods and sales and services
RR No. 3-89 - Regulations governing the imposition of 10% VAT on deposits for returnable
containers

RR No. 5-93 - Implementing guidelines requiring the monthly payment of VAT and amending
thereby Section 110 of the Tax Code

RR No. 7-95 - Consolidated Value-Added Tax Regulations

RR No. 5-96 - Amendment to Sections 245 of the Tax Code in relation to Revenue Regulations No.
7716 - Export Services and Importation of Meat to WTO Member VAT exempt.

RR No. 6-97 - Implementing Republic Act. No. 2241 An Act Amending Republic Act no. 7716,
otherwise known as the Expanded Value-Added Tax Law, and other pertinent provisions of the National
Internal Revenue Code, as amended and further amending Revenue Regulations No. 7-95, as amended
otherwise known as the Consolidated Value-Added Tax Regulations

RR No. 13-97 - Amending further Revenue Regulations No. 7-95 as last amended by Revenue
Regulations No. 6-97

RR No. 7-99 - Amends further Revenue Regulations No. 7-95 relative to the submission of the
Summary Lists of Sales and Purchases in magnetic form

RR No. 8-99 - Provides penalties for violation of the requirement that output tax on sale of goods
and services should not be separately indicated in the sales invoice or official receipt

RR No. 18-99 - Prescribes the regulations relative to the imposition of VAT on services of banks,
non-bank financial intermediaries and finance companies beginning January 1, 2000

RR No. 19-99 - Prescribes the regulations relative to the imposition of VAT beginning January 1,
2000 on the sale of services by persons engaged in the practice of profession or calling and professional
services rendered by general professional partnerships; services rendered by actors, actresses, talents,
singers, and emcees; radio and television broadcasters and choreographers; musical, radio, movie,
televisions and stage directors; and professional athletes

RR No. 4-2000 - Prescribes the posting in place of business of a notice on the requirement for the
issuance of sales/commercial invoices and/or official receipts by persons engaged in trade or business,
including the exercise of profession

RR No. 6-2001 - Amends pertinent provisions of certain revenue issuances relative to the
inclusion of additional taxpayers to be subject to Final Withholding Tax, revision of the Withholding Tax
rates on certain income payments subject to Creditable Withholding Tax, time for the filing of various
tax returns and payment of the taxes due thereon and others

RR No. 1-2003 - Implementing Sec. 5 of R.A. No. 8424, otherwise known as the Tax Reform Act of
1997, and other pertinent provisions of the NIRC of 1997, as last amended by R.A. No. 9010, imposing
VAT on sale of services by persons engaged in the practice of profession or calling and professional
services rendered by general professional partnerships; services rendered by actors, actresses, talents,
singers and emcees; radio and television broadcasters and choreographers; musical, radio, movie,
television and stage directors; and professional athletes, as well as services rendered by customs, real
estate, stock, immigration and commercial brokers, beginning January 1, 2003.
 RR No. 3-2003 - Extends the deadline for registration and other compliance requirements during
the transitory period of the imposition of Value-Added Tax (VAT) on sale of services by professional and
brokers.

RR No. 11-2003 - Extends further the deadline for registration and other compliance
requirements during the transitory period of the imposition of Value-Added Tax (VAT) on sale of services
by professionals and brokers

RR No. 12-2003 -Amends certain provisions of RR No. 18-99 which governs the imposition of VAT
on services of banks, non-bank financial intermediaries and finance companies beginning January 1,
2003

RR No. 14-2003 - Amending Revenue Regulations No. 2-98, as amended, in order to simplify the
collection of tax, through withholding at the source, on sales of goods or services subject to 3%
percentage tax under Section 116 of the Code, and/or to the value-added tax (VAT) under Sections 106
and 108 of the same Code

RMC No. 14-2003 - Waiver of penalties on professionals and brokers becoming liable to VAT or
percentage tax, beginning January 1, 2003 who failed to file their VAT/ percentage tax returns for the
months of January and February on the due dates specified under RR No. 1-2003, as amended by RR
Nos. 3-2003 and 11-2003.

RR No. 1-2005 – Amending further Revenue Regulations No. 7-95 as last amended by Revenue
Regulation No. 8-2002. However, this regulation is not yet being implemented pending the lifting of a
Temporary Restraining Order (TRO) from the Supreme Court.

RR No. 14-2005 – Consolidated Value-Added Tax Regulations of 2005.

RR No. 16-2005 – Consolidated Value-Added Tax Regulations of 2005.

RR No. 4-2007 – Amending certain provisions of RR No. 16-2005, as amended, otherwise known
as the Consolidated VAT Regulations of 2005.

RR No. 6-2007 – Consolidated Regulations on Advance Value Added Tax on the Sale of Refined
Sugar, Amending and/or Revoking All Revenue Issuances Issued to this Effect, and for Other Related
Purposes.

RR No. 11-2007 – Suspension of the Implementation of RR No. 6-2007.

Codal Reference
Sections 105 to 115 of the National Internal Revenue Code

Frequently Asked Questions

I. General VAT Queries
II. RELIEF Related Queries
III. RELIEF Technical Queries
IV. VAT on Professionals
V. VAT on Insurance Agents
VI. Other Professional Practitioners
I. General VAT Queries
1) Where are VAT returns filed?
The Monthly VAT Declaration (BIR Form 2550M) and Quarterly VAT Return (BIR Form 2550Q)
shall be filed with any Authorized Agent Bank (AAB) in the place where the taxpayer is registered
or required to be registered.
In cases of no-payment, the return shall be filed with the Revenue District Office (RDO)/LTDO
and LTAD where the taxpayer is registered or required to be registered.
In places where there are no AABs, it shall be filed with and the tax paid to the Revenue
Collection Officer or duly Authorized City or Municipal Treasurer of the place where the RDO is
located.
2) 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.
3) What is "input tax"?

Input tax means the VAT paid by a VAT-registered person in the course of his trade or business
on importation of goods or local purchase of goods or services, including lease or use of
property, from a VAT-registered person. It shall also include the transitional input tax
determined in accordance with Section 111 of the Tax Code
4) 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:
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 the privilege to use in the Philippines any industrial, commercial or
scientific equipment
d. The right or the privilege to use motion picture film, films, tapes and discs
e. Radio, television, satellite transmission and cable television time
5) 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, including those performed or
rendered by the following:
a. Construction and service contractors
b. Stock, real estate, commercial, customs and immigration brokers
c. Lessors of property, whether personal or real
d. Warehousing services
e. Lessors or distributors of cinematographic films
f. Persons engaged in milling, processing, manufacturing or repacking goods for others
g. Proprietors, operators or keepers of hotels, motels, resthouses, pension houses, inns,
resorts
h. Proprietors or operators of restaurants, refreshment parlors, cafes and other eating
places, including clubs and caterers
i. Dealers in securities
j. Lending investors
k. 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,
air and water relative to their transport of goods or cargoes
l. Services of franchise grantees of telephone and telegraph, radio and television
broadcasting and all other franchise grantees except those under Section 119 of the Tax
Code
m. Services of non-life insurance companies (except their crop insurances), including
surety, fidelity, indemnity and bonding companies
n. Similar services regardless of whether or not the performance thereof calls for the
exercise or use of the physical or mental faculties
The phrase "sale or exchange of services" shall include:
a. The lease or the 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
h. The lease or the use of or the right to use radio, television, satellite transmission and
cable television time
6) 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.
7) What transactions are considered as zero-rated sales?
The following services performed in the Philippines by VAT-registered persons 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 those mentioned in the preceding paragraph, 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 vessels engaged exclusively in international shipping
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

The following sales by VAT-registered persons shall be subject to zero percent (0%)
rate:
a. Sale of goods which are directly shipped by a VAT-registered resident to a place
outside the Philippines
b. Sale of goods which are considered as "deemed" export sales by a VAT-registered
person to certain entities who are also residents of the Philippines:
Sales to export-oriented enterprises which the Code considers as export sales
at the level of the supplier of raw materials
Sales of gold to the Bangko Sentral ng Pilipinas
Sales considered as exportation of goods under a special law such as
Executive Order No. 226 (Omnibus Investments Code of 1987) and Republic Act
No. 7916 (PEZA Law)
c. Foreign currency denominated sales of goods
d. Sales to entities, the exemption of which, under a special law or an international
agreement with the Government of the Philippines, effectively zero rates such sales
8) Where will taxpayers file their applications for VAT zero-rating?
Taxpayers may file their application with the Audit Information, Tax Exemption and
Incentives Division (AITEID) at the BIR National Office.
9) What is a Contractor's Final Payment Release Certificate and where should taxpayers
file their application for this?
The Contractor's Final Payment Release Certificate is issued by the BIR before a
government contractor is fully paid for his contract with the government. Taxpayers
may file their application at the BIR National Office at the Audit Information, Tax
Exemption and Incentives Division (AITEID)
10) What transactions are considered as deemed sales?
The following transactions are considered as deemed sales:
a. 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
b. Distribution or transfer to:
- Shareholders or investors as share in the profits of the VAT-registered person;
or
- Creditors in payment of debt
c. Consignment of goods if actual sale is not made within sixty (60) days
following the date such goods were consigned
 d. Retirement from or cessation of business, with respect to inventories of
taxable goods existing as of such retirement or cessation
11) 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.
12) What are the VAT-exempt transactions?
a. Sale of non-food agricultural, marine and forest products in their original state
by the primary producer or owner of the land where the same were produced
b. Sale of cotton and cotton seeds in their original state and copra
c. 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 generic materials
therefor
d. 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
generally considered as pets)
e. Sale or importation of coal and natural gas, in whatever form or estate, and
petroleum products (except lubricating oil, processed gas, grease, wax and
petrolatum) subject to the Excise Taxes imposed under Title VI of the Tax Code
f. Sale or importation of raw materials to be used by the buyer or importer
himself in the manufacture of petroleum products subject to excise tax, except
lubricating oil, processed gas, grease, wax and petrolatum
g. Importation of passenger and/or cargo vessels of more than five thousand
tons, whether coastwise or ocean-going, including engine and spare parts of
said vessel to be used by the importer himself as operator thereof
h. Importation of personal and household effects belonging to residents of the
Philippines returning from abroad and nonresident citizens coming to resettle in
the Philippines; Provided, that such goods are exempt from customs duties
under the Tariff and Customs Code of the Philippines
i. Importation of professional instruments and implements, wearing apparel,
domestic animals, and personal household effects (except any vehicle, vessel,
aircraft, machinery, other goods for use in the manufacture and merchandise of
any kind in commercial quantity) belonging to persons coming to settle in the
Philippines, for their own use and not for sale, barter or exchange,
accompanying such persons, or arriving within ninety (90) days before or after
their arrival, upon the production of evidence satisfactory to the Commissioner
of Internal Revenue, that such persons are actually coming to settle in the
Philippines and that the change of residence is bona fide
j. Services subject to percentage tax under Title V of the Code
k. Services by the agricultural contract growers and milling for others of palay
into rice, corn into grits, and sugar cane into raw cane sugar
l. Medical, dental, hospital and veterinary services except those rendered by
professionals
m. Educational services rendered by private educational institutions, duly
accredited by the Dept. of Education Culture and Sports (DECS), and
Commission on Higher Education (CHED), and those rendered by the
government educational institutions
n. Sale by the artist himself of his works of art, literary works, musical
compositions and similar creations, or his services performed for the production
of such works
o. Services rendered by individuals pursuant to an employer-employee
relationship
p. 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
q. Transactions which are exempt under international agreements to which the
Philippines is a signatory, or under special laws, except those under the
following laws:
- P.D. No. 66 - Export Processing Zone Authority (EPZA) registered firms
- P.D. No. 529 - Petroleum Exploration Concessionaires under the Petroleum Act
of 1949
- P.D. No. 1590 - Philippine Airlines (PAL) relative to domestic transport of goods
or cargoes
r. Sales by agricultural cooperatives duly registered with the Cooperative
Development Authority (CDA) to their members as well as sale 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
s. Sales by electric cooperatives duly registered with the Cooperative
Development Authority (CDA) or National Electrification Administration (NEA),
relative to the generation and distribution of electricity, as well as their
importation of machineries and equipment, including spare parts, which shall be
directly used in the generation and distribution of electricity
t. Gross receipts from lending activities by credit or multi-purpose cooperatives
duly registered with the Cooperative Development Authority (CDA) whose
lending operation is limited to their members
u. Sales by non-agricultural, non-electric and non-credit cooperatives duly
registered with the Cooperative Development Authority: Provided, that the
share capital contribution of each member does not exceed Fifteen Thousand
Pesos (P 15,000) and regardless of the aggregate capital and net surplus ratably
distributed among the members
v. Export sales by persons who are not VAT-registered
w. Sale of real properties as follows:
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 R.A. No. 7279, otherwise known as the “Urban Development
Housing Act of 1992” and other related laws, such as R.A. No. 7835 and
R.A. No. 8763 wherein the price ceiling per unit is P750,000.00 or as
may from time to time be determined by the Housing and Urban
Development Coordinating Council (HUDCC) and the National Economic
Development Authority (NEDA);
iii. Sale of real properties utilized for socialized housing as
defined under R.A. No. 8763, wherein the price ceiling per unit is
P225,000.00 or as may from time to time be determined by the HUDCC
and the NEDA and other related laws;
iv. Sale by real estate dealers and/or lessors of house and lot
and other residential dwellings valued at P1,500,000.00 and below:
Provided, that not later that January 31, 2006 and each calendar year
thereafter, the amount shall be adjusted to its present value using the
Consumer Price Index as published by the National Statistics Office
(NSO).
x. Lease of a residential unit with a monthly rental per unit not exceeding Ten
Thousand Pesos (P10,000.00), regardless of the amount of aggregate rentals
received by the lessor during the year: Provided, that the exemption likewise
applies to lease of residential units where the monthly rental per unit exceeds
P10,000.00 but the aggregate rentals of the lessor during the year do not
exceed P750,000.00. Provided finally, that not later than January 31, 2006 and
each calendar year thereafter, the amount of P10,000.00 shall be adjusted to its
present value using the Consumer Price Index, as published by the NSO;
y. 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
 z. 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 does not exceed the amount of P750,000.00: Provided, that not
later than January 31, 2006 and each calendar year thereafter, the amount shall
be adjusted to its present value using the Consumer Price Index, as published by
the NSO.
aa. Services of banks, non-bank financial intermediaries performing quasi-banking
functions, and other non-bank financial intermediaries;
bb. Services rendered by doctors of medicine duly registered with the Professional
Regulations Commission (PRC); and
cc. Services rendered by lawyers duly registered with the Integrated Bar of the
Philippines (IBP).
II. RELIEF-Related Queries
1) What is 'RELIEF"?
RELIEF means Reconciliation of Listings 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.
2) 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 (P 2,500,000) are required to submit a Summary List of
Sales.
3) Who are required to submit Summary List of Purchases?
VAT taxpayers with quarterly total purchases (net of VAT) exceeding One Million Pesos
(P 1,000,000) are required to submit Summary List of Purchases.
4) What are the Summary Lists required to be submitted?
a) Quarterly Summary List of Sales to Regular Buyers/Customers and Casual
Buyers/Customers and Output Tax;
b) Quarterly Summary List of Local Purchases and Input tax; and
c) Quarterly S