Sec.

107 (A) There shall be levied,

assessed and collected on every
importation of goods a value-added tax
equivalent to 10% based on the total
value used by the Bureau of Custom in
determining tariff and customs duties,
plus customs duties, excise taxes.
The VAT on the Importation of Goods
increased at Twelve percent (12%).
Rate and Base of Tax
Sec. 108 (A) Provision defines sale or
exchange of services.
Sale of electricity by generation
companies, transmission by any
entity, and distribution companies,
including electric cooperatives is
included in the definition of sale or
exchange of services.
Transaction Subject to Zero Percent (0%) Rate
Sec. 108 (B) Zero-rated sales of
services include:
1. Services rendered to persons
engaged in international shipping
or international air transport
operations, including leases of
property for use thereof
2. Processing, manufacturing or
repacking goods for other persons
doing business outside the
Philippines which goods are
subsequently exported, where the
services are paid for in acceptable
foreign currency and accounted
for in accordance with the rules
and regulations of the BSP
Services performed by subcontractors
and/or contractors in processing,
converting, or manufacturing goods for
an enterprise whose export sales
exceed seventy percent (70%) of total
annual production
For Item 1 - Those services shall be
exclusive for international shipping or
air transport operations
For Items 2 and 3 - Subjected to
12% VAT upon successful
establishment and implementation of
an enhanced VAT refund system that
grants refunds of creditable input tax
within 90 days from filing of the VAT
refund application with the BIR and
all pending VAT refund claims as of 31
December 2017 shall be fully paid in
cash by 31 December 2019.
Note: This Item has been VETOED by
President Rodrigo R. Duterte.
Note: The following are supposed to
be included in the zero-rated sale but
was vetoed by the President: Services
rendered to:
(i) Registered enterprise within a
separateactivities principally for subsistence or livelihood
a. Minimum Wage Earner b. Marginal Income Earner
c. Ambulant Vendor
d. A privileged store
Commented [a6]:
Commented [a7]:
Commented [a8]:
Commented [a9]:
Commented [a10]:
12. Which is correct?
a. An excise tax which imposes a tax based on weight or volume capacity or any other physical
unit measurement is called specific tax
b. An excise tax which imposes a tax based on selling price or other specified value of the
article is called ad valorem tax.
c. A percentage tax which is imposed