VATABLE SALES/RECEIPTS

When are you liable to VAT?

 VAT registered
o Mandatory
 Gross sales/ Gross Receipts exceed 3M
 Radio and/or TV companies: Gross Receipts > 10M
o Op onal

 NON-VAT Taxpayer – 3%
o Except:
 Coopera ves
 Individuals op ng 8% commuted tax
 VAT Registered
Output VAT XX
Less: Input VAT XX
VAT due XX
Less: Tax Credit XX
VAT S ll due XX

Gross Sales
Less: Sales, Returns, Discounts and Allowance
Net Sales
+ Excise Tax
Gross Selling Price x 12%

Sources of 12% Output VAT

1. Sale of VATable goods – 12% on Selling Price

Gross Sales
Less: Sales, Returns, Discounts and Allowance
Net Sales
+ Excise Tax
Gross Selling Price x 12%

2. Sale of VATable services – 12% on Gross Receipts

 Lessor of Residen al Units
Monthly Annual VAT OPT (3%)
Does not exceed Regardless X X
15,000
Exceed 15,000 Not exceed 3M X /
Exceed 15,000 Exceed 3M / X
Commercial Less than or equal X /
regardless of to 3M
monthly rent Less than 3M / X
3. Sale of VATable real proper es – 12% on Selling Price or FMW whichever is higher
 Capital asset – subject to CGT
 Ordinary asset – taxable
4. Transac ons deemed sale – 12% on FV
a. Consump on not in the course of business (applicable to VATable goods and
services)
i. Withdrawal of goods for personal use
ii. Dacion en pago
iii. Property dividend
iv. Exchange of property
b. Re rement or cessa on of business - all ordinary asset VATable
i. 12% of Fair Value of Book Value whichever is lower
c. Cancella on of VAT Statute
i. 12% of FV
d. Consignment of goods if not withdrawn in 60 days
i. 12% of FV

Sources of 0% VAT
1. Zero-rated sales of goods
a. Direct export – paid using foreign currency, if paid using PHP exempt sale
b. Sale of goods to interna onal carriers – regardless of the currency of payment
c. Sale of goods to persons with indirect tax exemp on – ADB, IRRI, Diplomats with
VAT exemp on ID card
d. Sales to export processing zones
2. Zero-rated sales of services
a. Sales if services to non-residents
i. Rendered in the PH
ii. Paid for in acceptable foreign currencies
b. Outgoing transport by domes c air or sea carriers
c. Sale of fuel from renewable sources of energy
d. Persons with indirect tax exemp on
e. Services to interna onal carriers

Sources of Input VAT

1. Transi onal Input VAT
a. Actual VAT paid or 2% of VATable Beginning Inventory whichever is higher
2. Regular Input VAT
a. Purchase of goods
b. Purchase of services
c. Purchase of capital goods
3. Amor za on of deferred Input VAT (prior to January 1, 2022)
4. Presump ve Input VAT
a. 4% of primary agricultural purchases
5. Standard Input VAT
6. Input VAT carry over
 VAT Inclusive VAT Exclusive
Invoice Gross Selling Price
Bill Gross Receipts
Payment/ paid Fair Value
Collec on/ collected

Input VAT from

a. Regular Sales – 12%
b. Zero-rated Sales – creditable except when claimed as tax credit
a. Carry-over – offset to output tax in local/ domes c sales
b. Ask for refund – applica on. 2 years a er the end of the quarter
c. Concert to Tax Credit Cer ficate (TCC) – may be use in paying other internal
revenue taxes
c. Exempt Sales – part of cost or expense

Importa on Tax Base

Custom and Tariff Du es
a. Based on quan ty or volume – Landed Cost
Income Amount
+ Custom du es
+ Freight, insurance, brokerage
Landed Cost
+ Excise Tax
Tax base
b. Based on value of imported goods – Du able Value
Du able Value
+ Custom Du es
+ Other Charges
+ Excise tax
Tax Base
OTHER PERCENTAGE TAX
1. Persons exempt from VAT
a. Annual GS/R
 3M or less – OPT unless VAT Registered
 More than 3M – VAT
2. Persons exempt from OPT
a. Coopera ves
b. Individuals availing 8% income tax op on
c. Marginal income earners (less than 100,000 per year)
d. VAT Registered

Sec. 117. Domes c Carriers & Keepers of Garages

 3% Common carriers tax

Sec. 118. Interna onal Carriers and Shipping Carriers

 3% CCT + 2.5% on GPB
Passenger Exempt
PH to Abroad Goods/ Cargoes/
3% CCT
Mails
Route
Passenger
Exempt
Abroad to PH Goods/ Cargoes/
Mails

Sec. 119. Franchise Grantees

Gas and Water 2% Franchise Tax
More than 10M VAT
Type 3% Franchise Tax
Radio and TV
Less than 10M (unless VAT
Registered)

Sec. 120. Overseas dispatch, message or communica on origina ng from PH

 10% overseas communica on tax
PH to PH VAT
Line PH to Abroad 10% OCT
Abroad to PH Exempt

Sec. 121. Banks and Non-bank financial intermediaries performing quasi-func ons.
a. Interest
- 5 years or less maturity period – 5%
- More than 5 years - 1%
b. Dividends - 0%
c. Royal es, rentals - 7%
d. Net trading gains – 7%

Sec. 122. Other non-bank financial intermediaries/ ins tu ons

 Subject to GRT – 5% or 1%
Sec. 123. Life Insurance Premium
 2% on collec ons by insurance companies
 Exempt: reinsurance
 Exempt: insurance of NR received from abroad

Sec. 124. Agents of Foreign Insurance Companies

 Agent – 4%
 Non-agent – 5%

Sec. 125. Amusement Taxes

 Liable: Proprietor, lessee, operator
o Boxing – 10% or Exempt
o Pro-basketball – 15%
o Cockpits, Cabaret – 18%
o Jai-alai & Racetrack – 30%

Sec. 126. Tax on Winnings (Race horsing)

Horse owner 10% on Gross winnings
Winner Ordinary 10%
Be or
Special 4%

Sec. 127. Stock Transac on Tax and Ini al Public Offering

 Listed and Traded – 6/10 of 1% on Selling Price
 Not listed – 15% CGT
 Except dealers in securi es