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VALUE-ADDED TAX

Concept
• Tax on consumption levied on the sale, barter, exchange or lease of
goods or properties or services in the Philippines, and on importation
of goods into the Philippines

• It is an indirect tax.

When VATable?
• Sale, barter, exchange, or lease in the Philippines
– made in the ordinary course of trade or business

• Importation of goods into the Philippines
– whether or not made in the course of trade or business

• Taxable goods, properties, or services

• By a taxable person in the course of trade or furtherance of his/its
profession

Rule of Regularity
• Regular conduct or pursuit of a commercial or an economic activity
– including transactions incidental thereto

• By any person
– regardless of whether or not the person engaged therein is a
non-stock, non-profit private organization (irrespective of the
disposition of its net income and whether or not it sells
exclusively to members or their guests), or government entity

• Exceptions

ecozones are foreign territories .Cross Border Doctrine/Destination Principle • General Rule: VAT shall be imposed only on goods destined for consumption within the territorial border of the taxing authority. • Except: Freeport zones and economic zones – By fiction of law.

excluding VAT. barter or exchange of the goods or properties.determined and granted at the time of the sale – Sales returns and allowances – Goods or properties other than real property – the total amount of money or its equivalent which the purchaser pays or is obligated to pay to the seller in consideration of the sale.VAT on sale of goods or properties • Rate: 12% • Base: Gross selling price – Sales discounts . whichever is higher . plus excise tax – Real property – the consideration stated in the sales document or the FMV (whichever is higher of the zonal value or assessed value).

or other like property or right • The right or privilege to use in the Philippines of any industrial. plan. design or model. commercial. satellite transmission and cable transmission time . and discs • Radio. television. trade brand. goodwill. or scientific equipment • The right or privilege to use motion pictures films. secret formula or process. trademark. tapes.VAT on sale of goods or properties • Real properties 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.

including interest and penalties.VAT on sale of goods or properties • Real property – Installment plan • the initial payments of which in the year of sale do not exceed 25% of the GSP • installment payments. actually and/or constructively received by the seller – Deferred-payment basis • Initial payments exceed 25% of GSP • Cash sale: entire selling price • Input VAT? .

13-2012: Subject to VAT • aggregate value of the adjacent properties exceeds Php1.VAT on sale of goods or properties • Sale of two or more adjacent lots in favor of one buyer from the same seller? – RR No.919.200 (for residential house and lots or other residential dwellings) • although covered by separate titles and/or separate tax declarations • Parking lots in a condominium? – Subject to VAT. and Php3.199.500 (for residential lots). regardless of the amount .

with respect to inventories of taxable goods existing as of such retirement or cessation .Transactions deemed Sale • Transfer. use. consumption not in the course of business of goods or properties originally intended for sale or for use in the course of business • Distribution or transfer to: – Shareholders or investors as share in the profits of the VAT- registered persons – Creditors in payment of debt • Consignment of goods if actual sale is not made within 60 days following the date such goods were consigned • Retirement from or cessation of business.

VAT on sale of service and use or lease of properties • Performance of all kinds of services in the Philippines for others for a fee. remuneration or consideration whether in kind or in cash • Rate: 12% • Base: Gross receipts – Actual or constructive receipt .

machinery or other apparatus purchased from such nonresident person . commercial or. technical. or the installation or operation of any brand. goodwill. secret formula or process. patent. or right or any such knowledge or information • Supply or services by a nonresident person or his employee in connection with the use of property or rights belonging to. design or model plan. or the right to use of any industrial. trade brand or other like property or right • Lease or the use of. industrial or commercial knowledge or information • 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. scientific equipment • Supply of scientific. trademark.VAT on sale of service and use or lease of properties • Lease or the use of or the right or privilege to use any copyright.

assistance or services rendered in connection with technical management or administration of any scientific. television. project or scheme • Lease of motion picture films. tapes and discs • Lease or the use of or the right to use radio.VAT on sale of service and use or lease of properties • Supply of technical advice. films. industrial or commercial undertaking. venture. satellite transmission and cable television time .

– TRAIN: Association dues.VAT on sale of service and use or lease of properties • Condominium dues? – RMC No. 65-2012: The association dues. Thus. and other assessments and charges collected by homeowners associations and condominium corporations shall be exempt . the gross receipts of condominium corporations including association dues. Income payments made to condominium corporations are subject to applicable withholding taxes under existing regulations. and other assessments/charges collected by condominium corporations constitute income payment or compensation for beneficial services that the condominium corporations provide to their members and tenants. membership fees. membership fees and other assessments and charges are subject to VAT and income tax. membership fees.

excise tax. and other charges prior to release of the goods from customs custody – Landed cost: where the customs duties are determined on the basis of the quantity or volume of the goods .VAT on Importation • Every importation. plus customs duties. whether for use in business or not • Rate: 12% • Base: – Total value used by the BOC in determining tariff and customs duty.

2005 ..Zero-rated sale of goods or properties • Zero-rated sale vs. exempt sale • Effectively-zero rated vs. Seagate Technology (Philippines). Inc. GR No. automatically zero-rated – CIR v. February 11. 153866.

Zero-rated sale of goods or properties EXPORT SALES • The sale and actual shipment of goods from the Philippines to a foreign country which must be paid in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP • The sale of raw materials or packaging materials to non-resident buyer for delivery to resident local export-oriented enterprise to be used in manufacturing. processing. or repacking in the Philippines of the said buyer’s goods. packaging. which must be paid in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP • Sale of raw materials or packaging materials to an export-oriented enterprise (enterprise whose export sales exceed 70% of total annual production of the preceding taxable year) • Sale of gold to the BSP – TRAIN: exempt transaction .

August 9. equipment and fuel shall be used for international shipping or air transport operations . 2005 – TRAIN: specifically included as part of “export sales” • Sale of goods. GR No. supplies.150154.Zero-rated sale of goods or properties EXPORT SALES • Those “considered export sales under EO No. Seagate Technology (Philippines). 226 (Omnibus Investment Code of 1987)” and other special laws – Sale to ecozones • CIR v. supplies. 2005 • CIR v. equipment and fuel to persons engaged exclusively in international shipping or international air transport operations – TRAIN: goods. Toshiba Information Systems Philippines. February 11. 153866. GR No.

Zero-rated sale of goods or properties FOREIGN CURRENCY DENOMINATED SALE • Sale to non-resident • Of goods assembled or manufactured in the Philippines. except automobiles and non-essential goods • For delivery to a resident in the Philippines • Paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP • Note: already removed under the TRAIN .

Zero-rated sale of goods or properties “EFFECTIVELY ZERO-RATED SALES” • Sales to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects such sales to zero rate .

Burmeister and Wain Scandinavian Contractor Mindanao. 153205.. 190102. January 22. GR No. GR No. v CIR.Zero-rated sale of services • Processing. which goods are subsequently exported and paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP • Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed and paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP – CIR v. manufacturing or repacking of goods for other persons doing business outside the Philippines. Inc. 2012 . Inc. 2007 – Accenture. July 11.

converting.Zero-rated sale of services • 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 0% rate • Services rendered to persons engaged exclusively in international shipping or air transport operations • Services performed by subcontractors and/or contractors in processing. or manufacturing goods for an enterprise whose export sales exceed 70% of the total annual production • Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country .

and other emerging sources using technologies such as fuel cells and hydrogen fuels • TRAIN: – Services rendered to registered enterprises within ecozones .Zero-rated sale of services • Sale of power or fuel generated through renewable sources of energy such as. biomass. ocean energy. solar. hydropower. geothermal and steam. but not limited to. wind.

zoo animals. LIVESTOCK AND POULTRY. BREEDING STOCK AND GENETIC MATERIALS • Livestock or poultry does not include fighting cocks. and other animals generally considered as pets • Original state: simple process of preparation or preservation for the market .VAT Exempt Transactions SALE OR IMPORTATION OF AGRICULTURAL AND MARINE FOOD PRODUCTS. race horses.

. • Except: Specially made feeds for race horses. ETC. SEEDLINGS. SEEDS. zoo animals and other animals generally considered as pets IMPORTATION OF PERSONAL AND HOUSEHOLD EFFECTS • Residents returning from abroad • Non-residents coming to resettle in the Philippines • Qualification: goods are exempt from customs duties . aquarium fish. fighting cocks.VAT Exempt Transactions SALE OR IMPORTATION OF FERTILIZERS.

AND PERSONAL HOUSEHOLD EFFECTS • Except: vehicles.500 (TRAIN: Php3M) . DOMESTIC ANIMALS. rank or position of the persons importing said items SERVICES SUBJECT TO PERCENTAGE TAX • Not exceed Php1.919. in quantities and of the class suitable to the profession. reasonable time) • TRAIN: includes Filipinos or their families and descendants who are now residents or citizens of other countries. goods for use in manufacture. WEARING APPAREL. and merchandise of any kind in commercial quantity • Arriving within 90 days (vs.VAT Exempt Transactions IMPORTATION OF PROFESSIONAL INSTRUMENTS AND IMPLEMENTS.

corn into grits. April 24. Inc. sugar can into raw sugar MEDICAL. 168129. GR No. DENTAL.VAT Exempt Transactions SERVICES BY AGRICULTURAL CONTRACT GROWERS AND MILLING FOR OTHERS • Of palay into rice. 2007 . Philippine Health Care Providers.. HOSPITAL AND VETERINARY SERVICES • Except: rendered by professionals • HMOs? – CIR v.

VAT Exempt Transactions EDUCATIONAL SERVICES • Private educational institutions accredited by CHED. DepEd. TESDA • Government educational institutions SERVICES RENDERED PURSUANT TO EMPLOYER-EMPLOYEE RELATIONSHIP SERVICES RENDERED BY RHQS TRANSACTIONS WHICH ARE EXEMPT UNDER INTERNATIONAL AGREEMENTS – Except: those granted under PD 529 or the Petroleum Exploration Concessionaires .

VAT Exempt Transactions SALES BY AGRICULTURAL COOPERATIVES • Accredited by CDA • To members: producer or not • Non-members: must be the producer • Includes: – Importation of direct farm inputs – Used directly and exclusively in the production and/or processing of their produce GROSS RECEIPTS BY CREDIT OR MULTI-PURPOSE COOPERATIVES • From lending activities .

500 (TRAIN: Php1.000) .199.500. or home lots • Residential – Lot: up to Php1.500.919.VAT Exempt Transactions SALES OF REAL PROPERTIES • Not primarily held for sale or held for lease in the ordinary course of trade or business – Used in trade/business? • Utilized for low-cost and socialized housing – Low-cost: subdivisions or condominiums registered and licensed by HLURB – Socialized: houses and lot.000) – House and lot: up to Php3.200 (TRAIN: Php2.

PRINTING. MAGAZINE. NEWSPAPER.000) • Dwelling places SALE.800 (TRAIN: Php15. PUBLICATION OF BOOKS. REVIEW OR BULLETIN • Appears at regular intervals • Fixed price or subscription • Not devoted principally to the publication of paid advertisements • E-books? . IMPORTATION.VAT Exempt Transactions LEASE OF RESIDENTIAL UNITS • Monthly rental per unit: up to Php12.

equipment. equipment and fuel shall be used for international shipping or air transport operations • Sale? . supplies.VAT Exempt Transactions TRANSPORT OF PASSENGERS BY INTERNATIONAL CARRIERS • Cargo? SALE. GOODS AND SUPPLIES BY PERSONS ENGAGED IN INTERNATIONAL SHIPPING OR AIR TRANSPORT OPERATIONS • TRAIN: goods. LEASE OF PASSENGER OR CARGO VESSELS AND AIRCRAFT • Includes: engine. IMPORTATION. spare parts • for domestic or international transport operations IMPORTATION OF FUEL.

NON-BANK FINANCIAL INTERMEDIARIES PERFORMING QUASI-BANKING FUNCTIONS. LEASE.VAT Exempt Transactions SERVICES OF BANKS. PERFORMANCE OF SERVICES • Gross annual sales and/or receipts: exceeds Php1. OTHER NON-BANK FINANCIAL INTERMEDIARIES • Subject to percentage tax SALE.919.500 (Php3M) .

2019) . and hypertension (beginning January 1. GOODS AND SERVICES TO SENIOR CITIZENS & PWD • RA 9994 TAX-FREE EXCHANGE TRANSACTIONS • Section 40(C)(2) of the NIRC ASSOCIATION DUES. high cholesterol. zero-rated SALE OF DRUGS AND MEDICINES • Prescribed for diabetes. LEASE. MEMBERSHIP FEES • Collected by homeowners associations and condominium corporations SALE OF GOLD TO THE BSP • 1997 NIRC: export sale.VAT Exempt Transactions .TRAIN SALE.

rental. lessee. Input VAT • When creditable? – Importer: upon payment of VAT prior to release of goods from customs custody – Purchaser of domestic goods or services: upon consummation of sale – Purchaser of services. licensee: upon payment of the compensation.Input VAT • Output VAT vs. 2021 . royalty or fee – Capital goods • Aggregate acquisition cost within a calendar month does not exceed Php1M: month of purchase • Exceeds Php1M: 60 months (5 years) or actual number of months (less than 5 years) • TRAIN: amortization allowed only until December 31.

materials and supplies • Fort Bonifacio Development Corp.Transitional Input VAT • Became VAT-registered persons upon exceeding Php1. 2009 .919.919.500 in any 12-month period • Voluntarily registers as a VAT taxpayer even does not exceed Php1. April 2. v CIR. GR no.500 – except franchise grantees of radio and/ or television broadcasting whose threshold I • Whichever is HIGHER of – 2% of value of beginning inventory on hand – Actual VAT paid on such goods. 158885.

cooking oil.Presumptive Input VAT • Processing of sardines. mackerel and milk • Manufacturing refined sugar. and packed noodle-based instant meals • 4% of the gross value in money of their purchases of primary agricultural products which are used as inputs to their production .

Withholding VAT • Sale of goods and services to the government – 5% withheld by the government – 7% standard input VAT • Actual > SIV: expense • Actual < SIV: income • Payment for lease or use of properties to non-resident owners – 12% .

2003 to October 5.Refund or Tax Credit ZERO-RATED AND EFFECTIVELY ZERO-RATED • 2 years from the close of the taxable quarter when the sales were made – Regardless when the input tax was actually paid – Administrative claim • 120 days to decide • Judicial claim (120+30) – 30-day period to appeal is mandatory and jurisdictional – Except: BIR Ruling No. DA 489-03: December 10. 2010 .

otherwise administrative sanction – No “deemed denial” • Judicial claim: 30 days from receipt of decision . TCC not allowed • 90 days. 120 days • BIR must act on the claim within 90 days.Refund or Tax Credit -TRAIN • Refund. vs.

919.919.500 (Php3M) – Reasonable grounds to believe that his gross sales or receipts will exceed Php1.500 (Php3M) • Effects of non-registration – Liable to VAT as if VAT-registered – Without the benefit of input tax • Optional registration for VAT – Irrevocable for 3 years • Except: franchise grantees of radio and TV whose annual gross receipts do not exceed Php10M .Administrative Provisions • Mandatory registration for VAT – Gross sales or receipts for the past 12 months exceeded Php1.

Administrative Provisions • Substantiation requirements – VAT invoice: goods or properties – VAT official receipt: lease of goods. services • Return and payment of VAT – Monthly – Quarterly (25th day of the month following the close of the quarter) .