Filing of Returns and Payment

1. Every person liable to pay VAT shall file a

quarterly return of the amount of his gross
sales or receipts within 25 days after the close
of each taxable quarter prescribed for each
taxpayer.

2. The monthly VAT Declarations of taxpayers

whether large or non-large shall be filed and the
taxes paid not later than the 20th day following
the end of each month.

3. Beginning January 1, 2023, the filing of return

and payment of VAT shall be done within 25 days
following the close of each taxable quarter.

Note: VAT is paid on a monthly basis. Payments

in the monthly VAT declarations shall be credited
in the quarterly VAT return to arrive at the net VAT
payable or excess input tax/overpayment as of
the end of a quarter.
d. Withholding of Final Value-added Tax on
Sales to Government

General Rule: VAT cannot be collected by way of

withholding.

Exceptions:
1. Gross payments by the government shall be
subject to the 5% final withholding VAT;

2. Gross payments by resident VAT taxpayers to

non-residents shall be subject to 12% withholding
VAT. [Sec. 4.114-2, RR 16-2005]

Note: The payor or person in control of the

payment is considered as the withholding agent.
Sales to Government

The government or any of its political

subdivisions, instrumentalities or agencies,
including GOCCs shall, before making payment
for purchases of goods and services which are
subject to the VAT, deduct and withhold a 5%
final VAT on the gross payments. [Sec. 114(C),
NIRC]

Note: Beginning January 1, 2021, the VAT

withholding system under this Subsection shall
shift from final to a creditable system. [Sec.
114(C), NIRC]

The 5% final VAT shall represent the net VAT

payable of the seller. The remaining 7%
effectively accounts for the standard input
VAT, in lieu of the actual input VAT directly
attributable or ratably apportioned to such
sales. [Sec. 4.114-2, RR 16-2005]
Should actual input VAT attributable to sales to
the government exceed 7% of the gross
payments, the excess may form part of the
sellers’ expense or cost. On the other hand, if
actual input VAT is less than 7% of gross
payment, the difference must be closed to
expense or cost. [Sec. 4.114-2, RR 16-2005]

Payments to non-residents

The government, as well as private corporations,

individuals, estates and trusts, whether large or
non-large taxpayers, shall withhold 12% VAT
with respect to the following:

1. Lease or use of properties or property rights

owned by non-residents; and

2. Other services rendered in the Philippines by

non-residents. [Sec. 22, RR 4-2007] Note:
Payments for purchases of goods and services
arising from projects funded by Official
Development Assistance (ODA) as defined under
RA No. 8182, or the ‘ODA Act of 1996’, as
amended, shall NOT be subject to the
final/creditable withholding tax system as imposed
in this Subsection. [Sec. 2, RR 13- 2018]

e. Administrative and Penal Sanctions

Surcharge, interest and other penalties – The
interest on unpaid amount of tax, civil penalties
and criminal penalties imposed in Title XI of the
NIRC shall also apply to violations of the VAT
provisions of the NIRC.

Suspension of business operations – In

addition to other administrative and penal
sanctions provided for in the NIRC and
implementing regulations, the CIR or his duly
authorized representative may order the
suspension or closure of a business
establishment for a period of not less than 5 days
for any of the following violations:
(1) Failure to issue receipts and invoices
(2) Failure to file VAT return as required under
Sec. 114 of the NIRC
(3) Understatement of taxable sales or receipts by
30% or more of his correct taxable sales or
receipt for the taxable quarter (4) Failure of any
person to register a