How to Change from VAT to Non-VAT

The Tax Reform for Acceleration and Inclusion, more popularly known as TRAIN, has
amended the tax code to increase the VAT Threshold from P1.919 Million to P3.0
Million. If you are a registered VAT taxpayer earning less than P3.0 Million, you may
now opt to be non-vat instead. This is great for services and high margin businesses as
this will most likely result in tax savings.

Who’s eligible to change their tax type from VAT to Non-VAT?

Taxpayers whose Gross Sales/Receipts are less than or equal to exactly P3.0 Million in
2017. To be clear, by Gross Sales/Receipts, this is your earnings before ANY
deductions.

VAT to Non-VAT

The Commissioner of Internal Revenue has recently released an advisory on how to

change from VAT to Non-VAT. 

You can follow the following procedure:

1. Download Form 1905 (xls / pdf) - Application for Registration Update. Do make
sure you check for the latest version of this form on the BIR website.

2. Fill out your form 1905 this way:

 Part I, Field 1: Enter your TIN

 Part I, Field 2: Enter your RDO Code

 Part I, Field 3: Enter Taxpayer’s Name (we recommend you double check with
your COR and check the matching fields there)

 Part II: Tick ( ) letter G

 Part II, Field 4G: Write Value-Added Tax under Cancelled Tax Types (the BIR
will fill out the rest of these fields)

 Part II, Field 5: Fill out and sign this section.

Additional Tips:

You may need to change your books of accounts and your receipts. There are
variances between RDO’s on this so better ask them when you submit your Form
1905.  If you do need to change your receipts, you need to fill out a Form 1906 -
Authority to Print Receipts so it may be a good idea to have it ready. Also, may be good
to purchase 2 to 4 columnar books so that you don’t have to pay for overpriced ones
that are invariably sold beside the RDOs.