VAT EXEMPT SALES AND TRANSACTIONS NOTE: livestock/poultry does not include fighting cocks,

1. Sale or importation of: race horses, zoo animals and other animals generally
- Agricultural and marine “food” products in their considered as pets.
“original state” 2. Sale/importation of :
(it must be food and in original state, eto yung - Fertilizers
mga hindi pa naprocess na products) - Seeds, seedlings and fingerlings, fish, prawn,
Ex: fisherman tas direkta sell sa market livestock and poultry feeds, including
- Livestock and Poultry of any kind generally used ingredients, whether locally produced or
as, or yielding or producing foods for human imported used in the manufacture of finished
consumption and breeding stock and genetic feeds.
materials therefore. EXCEMPTION: Specialty feeds refers to non-
Meaning of “original state” agricultural feeds or food for race horses, fighting
- Products classified under this exemption cocks, aquarium fish pets are subjected to vat.
(meat,fruits,veg) shall be considered in their
“orig state” even if they have undergone the Importation of premix enzyme additives for livestock
simple processes of preparation or preservation feeds – a sole proprietorship which has license to
for the marker (freezing, drying, salting, operate from the bureau of animal industry engaged in
broiling, roasting, smoking, stripping) including this kind of importation is to be duly registered for
those using advanced technological means of livestock, poultry and aquaculture feeds use only.
packaging, such as shrink wrapping in plastics,
vacuum packing tetra-pack, and other similar 3. Importation of personal and household effects
packaging methods. belonging to:
(example sa grocery ung mga poultry na - The residents of the Philippines returning from
freezed) abroad
Ex. Of agricultural and marine food products in their - Non resident citizens coming to resettle in the
orig state: phil
Agricultural Ex: damit or gamit sa bahay or kusina (dala mo from
- Polished/husked rice abroad)
- Corn grits Provided that such goods are exempt from customs
- Raw cane sugar and molasses duties under the Tariff and Customs Code of the
- Copra Phils. (not taxable kasi personal na gamit mo yon
Marine syempre)
- Fish - Pero kung isang truck dala mo eh for
- Crustaceans: lobster, shrimps, prawns, oysters, commercial na siya therefore taxable na, grabe
mussels, clams, trout, eels naman shshhhaa.
Livestock 4. Importation of professional instruments and
- Cows implements, tools of trade, occupation of
- Bulls employment, wearing apparel, domestic
- Calves animals, and personal and household effects
- Pigs belonging to:
- Sheep - Persons coming to settle in the phil
- Goats - Filipinos or their families and descendants who
- Rabbits are now residents or citizens of other countries,
Poultry such parties herein referred to as overseas
- Fowls Filipinos. (connected to number 3)
- Ducks Ex: ung mga citizen na sa ibang bans ana gusto nang
- Geese umuwi dahil sa tanda or American talaga na want
- Turkey magsettle.
 (difference neto at nung number 3, ung 3 eh taga Educ services shall render to academic,
pilipinas ka talaga) technical or vocational educ provided by private
and gov and it does not include seminars, in-
5. Services subject to percentage tax under title V service training, review classes and other similar
of the tax code (sections 116-127) services rendered by persons who are not
- Isa lang either vat or percentage accredited by deped ched and tesda.
6. Services by:
Ex: feu vat exempt tuition ganon misc other fees,
a. “agricultural contract growers” and
pero mga rents tenants subjected to vat.
b. “Milling” for others of: palay into rice, corn
9. Sec 109(i) services rendered by individuals
into grits, sugar cane into raw sugar (not all
pursuant to an employer-employee relationship
millers are exempt like flour)
(not actually engaged in business ka syempre,
Agricultural contact growers – persons producing for
and employee ay working for employer)
other’s poultry, livestock/agricul and marine food
10. 109 (j) services rendered by regional or area
products in orig state. Its services growing into
headquarters established in the ph by
marketable products.
multinational corp which act as supervisory,
Ex: poultry tas di alam gagawin sa mga itlog, so
communications and coordinating centers for
pinaalagaan niya mga itlog sa ibang tao then ibabalik sa
their affiliates, subsidiaries or branches in the
kanya pag nagging sisiw na. ung ibang tao na yon ay
asia-pacific region and do not earn or derive
agricultural contract growers
income from ph.
- Multinational corp, if they established
7. Medical, dental, hospital and veterinary services
headquarters in our country, need iclassify kung
except those rendered by professionals.
anong headquarter rhq or regional operating
Ex: stress from ecq after lockdown nagpacheck
headquarters. RHQ not deriving income, for
up ka bcs not feeling well, services by a doctor is
supervision purposes lang siya, if rohq naman
a professional fee, therefore vatable.
nagdederive ng income sa country natin
- Laboratory services are exempted regardless
therefore eto subject to income tax, at
kung kay doc or hospital.
nagnenegosyo eh business tax din.
- Medical services dito ay example naconfine ka,
dental= cancer related to dental or nadisgrasya
ka ganon exempt yun, pero kung nasakit lang
ngipin mo eh that’s a prof fee therefore vatable.
Another example: nagkasakit ung aso
pinagamot, vatable. Pinaoperahan aso =vat
exempt.
- Pharmacy or drugstore, sale of drugs and
medicines are subjected to VAT, unless
exempted by law like hypertension ganern.
- Hospital bills constitute medical services,
exempt
11. 109 (k) transactions which are exempt under
Ex: naconfine ka tas may mga sinaksak na
international agreements to which the ph is a
sayong gamot (in-patients which are included in
signatory or under special laws, except those
the hospi bills), exempt yon pero kung pinabili
under presidential decree no.529 (petroleum
ka ng gamot either sa labas ng hospi or sa hospi,
exploration concessionaires under petroleum
vatable (out-patients are taxable bcs not part of
act of 1949)
medical services of the hospi)
- Vat exempt pag sinabi ng treaty,
8. Sec 109 (h)- “educational services rendered by
napagkasunduan ng bansa eh exempt
private educational inst. Duly accredited by the
- Ex: PD 1869 – PAGCOR charter, RA 9367 –
deped, ched, tesda, and those rendered by
biofuels act, RA 10072 – phil red cross, RA 9994
government educational inst.
 expanded senior citizens act of 2010, RA 10754-
magna carta for PWDs
12. 109 (L) “sales by agricultural cooperatives duly
registered with the cooperative development
authority to their members as well as sale of
their produce, whether in its orig 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 or processing of their produce.
- Need icheck kaninong product binebenta, if
product mismo ni cooperative, kahit kanino
ibenta that’s vat exempt.
Ex: coconut farmers tayo then may cooperative
tapos siyang nangangasiwa ng ibang products
natin at sila nagaayos at nagcoconvert into
useful products (processed or not) then
ibebenta to members or non members. Basta
product mismo ni coop, kapag hindi niya naman
product ang binenta eh vatable sa non
members only.
13. 109 (m) gross receipts from “lending activities”
by “credit or multi purpose cooperatives” duly
registered with the coop development
authority” exemption is not only limited to the
gross receipts on loans extended to its
members but also to other persons who are not
members.
-( yung pautang lang, vat exempt, only to
lending activity lang)
- exempt to members or hindi, as long as to
lending activities lang, if non lending then
subjected to vat siya.
14. 109 (n) sales by non-agricultural, non-electric
and non-credit cooperatives duly registered
with the cooperative dev authority, provided
that the share capital contribution of each
member does not exceed 15,000 pesos and
regardless of the aggregate capital and net
surplus ratably distributed among the members.
Importation of stated above including spare
parts thereof, to be used by them are subject to
vat
- electric and credit coop are vatable
- eto kasi mga hindi nabanggit na coop before N, parang
etc na part tong N “and other coop” if nagfall siya ng
and other coop exempt siya IF HINDI LALAGPAS NG 15K
UNG SHARE CAPITAL CONTRIBUTION.
15. 0
16. P
17. Q
18. R
19. 109 (S) transport of passengers by
international carriers doing business in the
Philippines. The same shall not be subject to
other percentage taxes as amended under
RA10378
- Types of carriers, domestic and international,
yung binabanggit dito is international via air via
sea including shipping.
- Example if you go to America then hindi phil
airline instead mga foreign carriers like emirates
ganon, it is vat exempt, yung pamasahe mo is
vat exempt and not also into percentage tax.
- Transport of cargo by international carriers
doing business in the ph, vat exempt parin pero
subject to percentage tax common carrier’s
tax.
20. 109 (t) sale, importation or lease of passenger
or cargo vessels and aircraft, including engine,
equipment and pare parts thereof for domestic
or international transport operations, provided
that the exemption from vat on the importation
and local purchase of passenger andor cargo
vessels shall be subject to the requirements on
restriction on vessel importation and
mandatory vessel retirement program of
MARINA
- Pagbenta, pagimport or paupa ng passenger or
cargo vessels regardless if domestic or
international. If silent problem, pasok dito
unless stated.
21. 109 (u) importation of fuel, goods and supplies
by persons engaged in international shipping
(domestic or international company yan,
shipping ang sinabi) or air transport operations;
provided that the fuel goods and supplies shall
be used for international shipping or air
transport operations. Shall be used exclusively
or pertain to transport of goofs/passenger from
a port in the ph directly to a foreign port or vice
versa, without docking or stopping at any other
port in the ph.
 - Ex: phil airline nagimport ng fuel goods supply,
tanong aanhin niya? If international shipping
exempt, if domestic vatable.
- Basta dapat hindi from ph to another land in ph
basta hindi bababa to another land in ph.
- Local or foreign company exempt and sinasabi is
SHIPPING IF THE SHIPPING IS LOCAL THEN
VATABLE
22. 109 (V) services of banks, non-bank financial
intermediaries performing quasi-banking
functions, and other non-bank financial
intermediaries, such as money changers and
pawnshops, subject to percentage tax under
sections 121 and 122, respectively of the tax
code.
- Pag banko or financial intermediaries pawnshop
at money changers hindi siya vatable PERO
UNDER NG PERCENTAGE TAX (3%)
23. 109 (w) sale or lease of goods and services to
senior citizens and persons with disabilities, as
provided under RA no. 9994 (expanded senior
citizens act of 2010) and RA no. 10754 (an act
expanding the benefits and privileges of
persons with disability (PWD), respectively.
- Ex: bumili si lolo ng alak, hindi exempt yun,
hindi lahat na ibebenta sa senior ay exempt
24. 109 (X) transfer of property pursuant to section
40 © (2) of the tax code, as amended (upon
effectivity of RA10963-TRAIN)
- Tax-free exchanges refer to those instances
enumerated in section 40©(2), NIRC (hindi
subjected to: )are not subject to income tax,
capital gains tax, doc stamp tax, vat
IN GENERAL, 2 kinds of tax-free exchange (1) transfer
to a controlled corporation; and (2) merger or
consolidation.
- Transfer to a controlled corp – no gain or loss
shall be recognized if propery is transferred to a
corp by a person in exchange for stock or unit of
participation in such corporation of which as a
result of such exchange said person, alone or
together with others, not exceeding 4 persons,
gains control or said corp. (ex: si sir may maliit
na pagaari na lupa, etong lupa ay nitransfer ng
pagaari sa isang corp, at dahil don nagging
majority na ko ng shareholder, tawag dito ay
purely stock transaction sa income taxation,
transaction is exempt from taxes.
25. 109 (y) association dues. Membership fees, and
other assessments and charges collected on a
purely reimbursement basis by a homeowners’
associations and condominium corp.
- Yung binayad mo na association dues sa condo
or homeowners, gagamitin nila yun kasi
babayad nila sa ilaw sab asura sa gwardya kaya
reimbursement basis.
26. 109 (Z) Sale of gold o the bangko sentral ng
pilipinas. – only beg jan 1,2018 upon the
effectivity of RA10963(previously subject to 0%
vat)
- (UNA dapat gold PANGALAWA dapat sa BSP
ibebenta)
27. 109 (AA) sale of drugs and medicines prescribed
for diabetes, high cholesterol and hypertension
beg jan 1, 2019 kahit sino pa ang buyer at seller
(other meds and drugs are vatable)
ex: senior citizen or pwd bumili ng med hindi
ganyan, exempt parin kasi senior or pwd sila, if
normal ka lang na tao tas hindi ganyan yung
gamut na binili mo, vatable.
28. 109 (BB) sale or lease of goods or proeprties or
the performance of services other than the
transactions mentioned in the preceding
paragraphs, the gross annual sales and/or
receipts do not exceed the amount of 3m.
(under ng percentage tax if not included here sa
109 bb)