VAT Compliance Requirements

TAX COMPLIANCE MONITORING
BIR Form 2550M - Monthly Value-Added Tax Declaration

It is a form of sales tax which is imposed on sales or exchange of goods and
services in the Philippines. Serving as a form of indirect tax, VAT is passed on to the
buyer which consumes the product/service.
Who needs to file?
This return/declaration shall be filed in triplicate by the following taxpayers;
1. A VAT-registered person; and
2. A person required to register as a VAT taxpayer but failed to register.
This return/declaration must be filed by the aforementioned taxpayers for as long as
the VAT registration has not yet been cancelled, even if there is no taxable transaction
during the month or the aggregate sales/receipts for any 12-month period did not
exceed the P1,500,000.00 thresholds.
Documentary Requirements
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No.
2307), if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to
Withholding Tax at Source (SAWT), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Authorization letter, if return is filed by authorized representative.
Procedures
1. Fill-up BIR Form No. 2550M in triplicate copies (two copies for the BIR and one
copy for the taxpayer).
2. If there is payment:
o File the Monthly VAT declaration, together with the required attachments, and
pay the VAT due thereon with any Authorized Agent Bank (AAB) under the
jurisdiction of the Revenue District Office (RDO)/Large Taxpayers District
Office (LTDO) where the taxpayer (head office of the business establishment)
is registered.
o Accomplish and submit BIR-prescribed deposit slip, which the bank teller
shall machine validate as evidence that payment was received by the AAB.
The AAB receiving the tax return shall stamp mark the word "Received" on
the return and machine validate the return as proof of filing the return and
payment of the tax.
o In places where there are no AAB, file the Monthly VAT declaration, together
with the required attachments and pay the VAT due with the Revenue
Collection Officer (RCO)
o The RCO shall issue a Revenue Official Receipt upon payment of the tax.
3. If there is no payment:
o File the Monthly VAT Declaration, together with the required attachments,
with the RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent
having jurisdiction over the registered address of the taxpayer (head office of
the business establishment).
Filing Date
BIR Form No. 2550Q- Quarterly Value-Added Tax Return

This return/declaration shall be filed in triplicate by the following taxpayers;
1. A VAT-registered person; and
2. A person required to register as a VAT taxpayer but failed to register.
This return/declaration must be filed by the aforementioned taxpayers for as long as
the VAT registration has not yet been cancelled, even if there is no taxable transaction
during the month or the aggregate sales/receipts for any 12-month period did not
exceed the P1,500,000.00 thresholds.
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if
applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Previously filed return and proof of payment, for amended return
6. Authorization letter, if return is filed by authorized representative
Procedures
1. Fill-up BIR Form 2550Q in triplicate copies (two copies for the BIR and one copy
for the taxpayer)
2. If there is payment:
o File the Monthly VAT declaration, together with the required attachments, and
pay the VAT due thereon with any Authorized Agent Bank (AAB) under the
jurisdiction of the Revenue District Office (RDO)/Large Taxpayers District
Office (LTDO) where the taxpayer (head office of the business establishment)
is registered.
o Accomplish and submit BIR-prescribed deposit slip, which the bank teller
shall machine validate as evidence that payment was received by the AAB.
The AAB receiving the tax return shall stamp mark the word "Received" on
the return and machine validate the return as proof of filing the return and
payment of the tax.
o In places where there are no AAB, file the Monthly VAT declaration, together
with the required attachments and pay the VAT due with the Revenue
Collection Officer (RCO)
o The RCO shall issue a Revenue Official Receipt upon payment of the tax.
3. If there is no payment:
o File the Quarterly VAT Return, together with the required attachments with
the RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent
having jurisdiction over the registered address of the taxpayer (head office of
the business establishment).
Reminders:
o Only one consolidated Monthly VAT Declaration/Quarterly VAT Return shall
be filed covering the results of operation of the head office as well as the
branches for all lines of business subject to VAT.
o The Quarterly Summary Lists of Sales and Purchases shall be submitted in
Compact Disk-Recordable (CDR) following the format provided under Section
4.114-3(g) of RR No. 16-2005, as amended by RR No. 1-2012.
o The Quarterly Summary Lists of Sales and Purchases shall be submitted
through electronic filing facility for taxpayers under the jurisdiction of the
Large Taxpayers Service (LTS) and those enrolled under the eFPS.
Value-Added Tax Rates
o On sale of goods and properties - twelve percent (12%) of the gross selling price
or gross value in money of the goods or properties sold, bartered or exchanged
o On sale of services and use or lease of properties - twelve percent (12%) of
gross receipts derived from the sale or exchange of services, including the use or
lease of propertie
o On importation of goods - twelve percent (12%) based on the total value used by
the Bureau of Customs in determining tariff and customs duties, plus customs
duties, excise taxes, if any, and other charges, such as tax to be paid by the
importer prior to the release of such goods from customs custody; provided, that
where the customs duties are determined on the basis of quantity or volume of
the goods, the VAT shall be based on the landed cost plus excise taxes, if any.
o On export sales and other zero-rated sales - 0%
Filing Date
This return is filed not later than the 25th day following the close of each taxable
quarter. The term "taxable quarter" shall mean the quarter that is synchronized to the
income tax quarter of the taxpayer (i.e. Calendar quarter of Fiscal Quarter).
What compliance activities should a VAT taxpayer, after registration as such, do
promptly or periodically?
The following compliance activities must be performed by a VAT-registered taxpayer:
o Pay the annual registration fee of P500.00 for every place of business or
establishment that generates sales;
o Register the books of accounts of the business/occupation/calling, including
practice of profession, before using the same;
o Register the sales invoices and official receipts as VAT-invoices or VAT official
receipts for use on transactions subject to VAT. (If there are other transactions
not subject to VAT, a separate set of non-VAT invoices or non-VAT official
receipts need to be registered for use on transactions not subject to VAT);
o Filing of the Monthly Value-added Tax Declaration on or before the 20th day
following the end of the taxable month (for manual filers)/on or before the
prescribed due dates enunciated in RR No. 16-2005 (for e-filers) using BIR Form
No. 2550M and of the Quarterly VAT Return on or before the 25th day following
the end of the taxable quarter using BIR Form No. 2550Q, reflecting therein
gross receipts (for seller of service)/ gross sales (for seller of goods) and output
tax (VAT on sales); purchases of goods and services made in the course of trade
or business/exercise of profession and input tax (VAT on purchases), other
allowable tax credits as in the case of advance VAT payment and VAT withheld
by government payors, and VAT payable or excess input VAT, whichever is
applicable, with the accredited agent banks (AABs) of the BIR or Revenue
Collection Officers (RCOs) of the BIR (in areas without AAB), for returns with
payment, or with the RDO/LTDO having jurisdiction over the taxpayer (home
RDO/LTDO), for returns without payment. (The monthly VAT Declaration and the
Quarterly VAT Return shall reflect the consolidated total for all the taxable lines
of activity and all the establishments - head office and branches);
o Submit with the RDO/LTDO having jurisdiction over the taxpayer, on or before
the deadline set in the filing of the Quarterly VAT Return, the soft copy of the
Quarterly Schedule of Monthly Sales and Output Tax (if the quarterly sales
exceed P2,500,000.00), and the soft copy of the Quarterly Schedule of Monthly
Domestic Purchases and Input Tax/ the soft copy of the Schedule of
Transactional/Individual Importation ( if the quarterly total purchases exceed
P1,000,000.00), reflecting therein the required data prescribed under existing
revenue issuances.
What is the liability of a taxpayer becoming liable to VAT and did not register as
such?
Any person who becomes liable to VAT and fails to register as such shall be
liable to pay the output tax as if he is a VAT-registered person, but without the benefit of
input tax credits for the period in which he was not properly registered.
Who may opt to register as VAT and what will be his liability?
o Any person who is VAT-exempt under Sec. 109 of the Tax Code, as amended,
may, in relation to Sec. 109 (2) of the same Code, elect to be VAT-registered by
registering with the RDO that has jurisdiction over the head office of that person,
and pay the annual registration fee of P500.00 for every separate and distinct
establishment.
o Any person who is VAT-registered but enters into transactions which are exempt
from VAT (mixed transactions) may opt that the VAT apply to his transactions
which would have been exempt under Section 109 of the Tax Code, as
amended.
o Franchise grantees of radio and/or television broadcasting whose annual gross
receipts of the preceding year do not exceed ten million pesos (P10,000,000.00)
derived from the business covered by the law granting the franchise may opt for
VAT registration. This option, once exercised, shall be irrevocable. (Sec. 119,
Tax Code).
o Any person who elects to register under optional registration shall not be allowed
to cancel his registration for the next three (3) years.
The above-stated taxpayers may apply for VAT registration not later than ten (10)
days before the beginning of the calendar quarter and shall pay the registration fee
unless they have already paid at the beginning of the year. In any case, the
Commissioner of Internal Revenue may, for administrative reason deny any application
for registration. Once registered as a VAT person, the taxpayer shall be liable to output
tax and be entitled to input tax credit beginning on the first day of the month following
registration.
What are the instances when a VAT-registered person may cancel his VAT
registration?
o If he makes a written application and can demonstrate to the commissioner's
satisfaction that his gross sales or receipts for the following twelve (12) months,
other than those that are exempt under Section 109 (A) to (U), will not exceed
Three Million Pesos (P3,000,000.00); or
o If he has ceased to carry on his trade or business, and does not expect to
recommence any trade or business within the next twelve (12) months.
When will the cancellation for registration be effective?
The cancellation for registration will be effective from the first day of the following
month the cancellation was approved.
What is the invoicing/receipt requirement of a VAT-registered person?
A VAT registered person shall issue :
o A VAT invoice for every sale, barter or exchange of goods or properties; and
o A VAT official receipt for every lease of goods or properties and for every sale,
barter or exchange of services.
May a VAT-registered person issue a single invoice/ receipt involving VAT and
Non-VAT transactions?
Yes. He may issue a single invoice/ receipt involving VAT and non-VAT
transactions provided that the invoice or receipt shall clearly indicate the break-down of
the sales price between its taxable, exempt and zero-rated components and the
calculation of the Value-Added Tax on each portion of the sale shall be shown on the
invoice or receipt.
May a VAT- registered person issue separate invoices/ receipts involving VAT
and Non-VAT transactions?
Yes. A VAT registered person may issue separate invoices/ receipts for the
taxable, exempt, and zero-rated component of its sales provided that if the sales is
exempt from value-added tax, the term "VAT-EXEMPT SALE" shall be written or printed
prominently on the invoice or receipt and if the sale is subject to zero percent (0%) VAT,
the term "ZERO-RATED SALE" shall be written or printed prominently on the invoice or
receipt.
How is the Value-Added Tax presented in the receipt/ invoice?
The amount of the tax shall be shown as a separate item in the invoice or receipt.
Sample:
Sales Price P 100,000.00
VAT 12,000.00
Invoice Amount 112,000.00
What is the information that must be contained in the VAT invoice or VAT official
receipt?
o Name of Seller
o Description of the goods or properties or nature of the service
o Unit cost
o Quantity
o Date of transaction
o TIN of buyer, if VAT- registered and amount exceeds P1,000.00
o Address of Buyer
o Business Style of Buyer
o Name of Buyer
o Statement that the seller is a VAT-registered person, followed by his TIN
o Business Address of the Seller
o Business Style of the Seller
o Purchase price plus the VAT, provided that
o The amount of tax shall be shown as a separate item in the invoice or receipt;
o If the sale is exempt from VAT, the term "VAT-EXEMPT SALE" shall be written or
printed prominently on the invoice or receipt;
o If the sale is subject to zero percent (0%) VAT, the term "ZERO-RATED SALE"
shall be written or printed prominently on the invoice receipt; and
o If the sale involves goods, properties or services some of which are subject to
and some of which are zero-rated or exempt from VAT, the invoice or receipt
shall clearly indicate the breakdown of the sales price between its taxable,
exempt and zero-rated components, and the calculation of the VAT on each
portion of the sale shall be shown on the invoice or receipt.
o Authority to Print Receipt Number at the lower left corner of the invoice or receipt.
What is the liability of a VAT-registered person in the issuance of a VAT invoice/

receipt for VAT-exempt transactions?
If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT-
exempt transaction but fails to display prominently on the invoice or receipt the words
"VAT-EXEMPT SALE", the transaction shall become taxable and the issuer shall be
liable to pay the VAT thereon. The purchaser shall be entitled to claim an input tax
credit on his purchase.
What is "output tax"?
Output tax means the VAT due on the sale, lease or exchange of taxable goods
or properties or services by any person registered or required to register under Section
236 of the Tax Code.
What is "input tax"?
Input tax means the VAT due on or paid by a VAT-registered on importation of
goods or local purchase of goods, properties or services, including lease or use of
property in the course of his trade or business. It shall also include the transitional input
tax determined in accordance with Section 111 of the Tax Code, presumptive input tax
and deferred input tax from previous period.
Does amortization of input VAT still allowable?
Yes , but is only allowed until December 31, 2021 after which taxpayers with
unutilized input VAT on capital goods purchased or imported shall be allowed to apply
the same as scheduled until fully utilized: Provided, That in the case of purchase of
services, lease or use of properties, the input tax shall be creditable to the purchaser,
lessee or licensee upon payment of the compensation, rental, royalty or fee.
What will be the basis of the date of cancellation?
It is the date of issuance of tax clearance by the BIR, after full settlement of all
tax liabilities relative to cessation of business or change of status of concerned taxpayer
What comprises "goods or properties"?
o The term "goods or properties" shall mean all tangible and intangible objects,
which are capable of pecuniary estimation and shall include, among others:
o Real properties held primarily for sale to customers or held for lease in the
ordinary course of trade or business;
o The right or the privilege to use patent, copyright, design or model, plan, secret
formula or process, goodwill, trademark, trade brand or other like property or
right;
o The right or privilege to use in the Philippines of any industrial, commercial or

scientific equipment;
o The right or the privilege to use motion picture films, films, tapes and discs; and
o Radio, television, satellite transmission and cable television time.
What comprises "sale or exchange of services"?

The term "sale or exchange of services" means the performance of all kinds of
services in the Philippines for others for a fee, remuneration or consideration, whether in
kind or in cash, including those performed or rendered by the following:
a. Construction and service contractors;
b. Stock, real estate, commercial, customs and immigration brokers;
c. Lessors of property, whether personal or real
d. Persons engaged in warehousing services;
e. Lessors or distributors of cinematographic films;
f. Persons engaged in milling, processing, manufacturing or repacking goods for
others;
g. Proprietors, operators or keepers of hotels, motels, rest houses, pension houses,
inns, resorts, theatres, and movie houses;
h. Proprietors or operators of restaurants, refreshment parlors, cafes, and other
eating places, including clubs and caterers;
i. Dealers in securities;
j. Lending investors;
k. Transportation contractors on their transport of goods or cargoes, including
persons who transport goods or cargoes for hire and other domestic common
carriers by land relative to their transport of goods or cargoes;
l. Common carriers by air and sea relative to their transport of passengers, goods
or cargoes from one place in the Philippines to another place in the Philippines;
m. Sale of electricity by generating, transmission by any entity including the National
Grid Corporation of the Philippines (NGCP), and distribution companies including
electric cooperatives shall be subject to twelve percent (12%) VAT on their gross
receipts.;
n. Franchise grantees of electric utilities, telephone and telegraph, radio and/or
television broadcasting and all other franchise grantees, except franchise
grantees of radio and/or television broadcasting whose annual gross receipts of
the preceding year do not exceed Ten Million Pesos (P10,000,000.00), and
franchise grantees of gas and water utilities;
o. Non-life insurance companies (except their crop insurances), including surety,
fidelity, indemnity and bonding companies; and
p. Similar services regardless of whether or not the performance thereof calls for
the exercise of use of the physical or mental faculties.
The phrase "sale or exchange of services" shall likewise include:
a. The lease of use of or the right or privilege to use any copyright, patent, design or
model, plan, secret formula or process, goodwill, trademark, trade brand or other
like property or right;
b. The lease or the use of, or the right to use of any industrial, commercial or
scientific equipment;
c. The supply of scientific, technical, industrial or commercial knowledge or
information;
d. The 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, or
right or any such knowledge or information;
e. The supply of services by a nonresident person or his employee in connection
with the use of property or rights belonging to, or the installation or operation of
any brand, machinery or other apparatus purchased from such non-resident
person;
f. The supply of technical advice, assistance or services rendered in connection
with technical management or administration of any scientific, industrial or
commercial undertaking, venture, project or scheme
g. The lease of motion picture films, films, tapes and discs; and
h. The lease or the use of or the right to use radio, television, satellite transmission
and cable television time.
What is a zero-rated sale?
It is a sale, barter or exchange of goods, properties and/or services subject to 0%
VAT pursuant to Sections 106 (A) (2) and 108 (B) of the Tax Code. It is a taxable
transaction for VAT purposes, but shall not result in any output tax. However, the input
tax on purchases of goods, properties or services, related to such zero-rated sales,
shall be available as tax credit or refund in accordance with existing regulations.
What transactions are considered as zero-rated sales?
The following services performed in the Philippines by VAT-registered person
shall be subject to zero percent (0%) rate:
a. 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 Bangko Sentral ng Pilipinas
(BSP);
b. Services other than processing, manufacturing or repacking rendered to a person
engaged in business conducted outside the Philippines or to a non-resident
person engaged in business who is outside the Philippines when the services are
performed, the consideration for which is paid for in acceptable foreign currency
and accounted for in accordance with the rules and regulations of the Bangko
Sentral ng Pilipinas (BSP);
c. 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 zero percent (0%) rate;
d. Services rendered to persons engaged in international shipping or air transport
operations, including leases of property for use thereof; Provided, that these
services shall be exclusively for international shipping or air transport operations.
(Thus, the services referred to herein shall not pertain to those made to common
carriers by air and sea relative to their transport of passengers, goods or cargoes
from one place in the Philippines to another place in the Philippines, the same
being subject to twelve percent (12%) VAT under Sec. 108 of the Tax Code, as
amended);
e. Services performed by subcontractors and/or contractors in processing,
converting, or manufacturing goods for an enterprise whose export sales
exceeds seventy percent (70%) of total annual production;
f. Transport of passengers and cargo by domestic air or sea carriers from the
Philippines to a foreign country. (Gross receipts of international air carriers and
international sea carriers doing business in the Philippines derived from transport
of passengers and cargo from the Philippines to another country shall be exempt
from VAT; however they are still liable to a percentage tax of three percent (3%)
based on their gross receipts derived from transport of cargo from the Philippines
to another country as provided for in Sec. 118 of the Tax Code, as amended);
and
g. Sale of power or fuel generated through renewable sources of energy such as,
but not limited to, biomass, solar, wind, hydropower, geothermal and steam,
ocean energy, and other shipping sources using technologies such as fuel cells
and hydrogen fuels; Provided, however that zero-rating shall apply strictly to the
sale of power or fuel generated through renewable sources of energy, and shall
not extend to the sale of services related to the maintenance or operation of
plants generating said power.
The following sales by VAT-registered persons shall be subject to zero percent (0%)
rate:
1) Export sales
a) The sale and actual shipment of goods from the Philippines to a foreign country,
irrespective of any shipping arrangement that may be agreed upon which may
influence or determine the transfer of ownership of the goods so exported, paid in
acceptable foreign currency or its equivalent in goods or services, and accounted
for in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas (BSP);
b) The sale of raw materials or packaging materials to a non-resident buyer for
delivery to as a resident local export-oriented enterprise to be used in
manufacturing, processing, packing or repacking in the Philippines of the said
buyer's goods, paid for in acceptable foreign currency, and accounted for in
accordance with the rules and regulations of the BSP;
c) The sale of raw materials or packaging materials to an export-oriented enterprise
whose export sales exceed seventy percent (70%) of total annual production;
d) Transactions considered export sales under Executive Order No. 226, otherwise
known as the Omnibus Investments Code of 1987, and other special laws; and
e) The sale of goods, supplies, equipment and fuel to persons engaged in
international shipping or international air transport operations; Provided, That the
goods, supplies, equipment, and fuel shall be used exclusively for international
shipping or air transport operations; Provided, that the same is limited to goods,
supplies, equipment and fuel that shall be used in the transport of goods and
passengers from a port in the Philippines directly to a foreign port, or vice-versa
without docking or stopping at any other port in the Philippines unless the
docking or stopping at any other Philippine port is for the purpose of unloading
passengers and/or cargoes that originated from abroad, or to load passengers
and/or cargoes bound for abroad;Provided, further, that if any portion of such
fuel, goods or supplies is used for purposes other than the mentioned in this
paragraph, such portion of fuel, goods and supplies shall be subject to twelve
percent (12%) output VAT.
2) Sales to Persons or Entities Deemed Tax-exempt under Special Law or International
Agreement
Sale of goods or property to persons or entities who are tax-exempt under special
laws or international agreements to which the Philippines is a signatory, such as, Asian
Development Bank (ADB), International Rice Research Institute (IRRI), subject such
sales to zero rate.
What are the transactions which are no longer subject to zero-percent (0%)?
1. Sale of gold to BSP
2. Foreign-currency denominated sales
Upon the successful establishment and implementation of an enhanced VAT refund
system by the Department of Finance (DOF), what are the transactions that will now be
subject to twelve percent (12%) and no longer be subject to zero percent (0%)?
3. The sale of raw materials or packaging materials to a non-resident buyer for delivery
to a resident local export-oriented enterprise to be used in manufacturing,
processing, packing or repacking in the Philippines of the said buyer's goods, paid
for in acceptable foreign currency, and accounted for in accordance with the rules
and regulations of the BSP;
4. The sale of raw materials or packaging materials to an export-oriented enterprise
whose export sales exceed seventy percent (70%) of total annual production;
5. Transactions considered export sales under Executive Order No. 226, otherwise
known as the Omnibus Investments Code of 1987, and other special laws
6. 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 Bangko Sentral ng Pilipinas (BSP); and
7. Services performed by subcontractors and/or contractors in processing, converting,
or manufacturing goods for an enterprise whose export sales exceeds seventy
percent (70%) of total annual production.
What transactions are considered deemed sales?
The following transactions are considered as deemed sales:
Transfer, use or consumption, not in the course of business, of goods or
properties originally intended for sale or for use in the course of business. Transfer of
goods or properties not in the course of business can take place when VAT-registered
person withdraws goods from his business for his personal use;
a. Distribution or transfer to:
o Shareholders or investors as share in the profits of the VAT-registered
person; or
o Creditors in payment of debt or obligation
b. Consignment of goods if actual sale is not made within sixty (60) days following
the date such goods were consigned. Consigned goods returned by the
consignee within the 60-day period are not deemed sold;
c. Retirement from or cessation of business, with respect to all goods on hand,
whether capital goods, stock-in-trade, supplies or materials as of the date of such
retirement or cessation, whether or not the business is continued by the new
owner or successor. The following circumstances shall, among others, give rise
to transactions "deemed sale";
o Change of ownership of the business. There is a change in the ownership of
the business when a single proprietorship incorporated; or the proprietor of a
single proprietorship sells his entire business
o Dissolution of a partnership and creation of a new partnership which takes
over the business.
What is VAT-exempt sale?
It is a sale of goods, properties or service and the use or lease of properties
which is not subject to output tax and whereby the buyer is not allowed any tax credit or
input tax related to such exempt sale.
What are the VAT-exempt transactions?
a. Sale or importation of agricultural and marine food products in their original state,
livestock and poultry of a kind generally used as, or yielding or producing foods
for human consumption; and breeding stock and genetic materials therefore;
b. Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn,
livestock and poultry feeds, including ingredients, whether locally produced or
imported, used in the manufacture of finished feeds (except specialty feeds for
race horses, fighting cocks, aquarium fish, zoo animals and other animals
considered as pets);
c. Importation of personal and household effects belonging to residents of the
Philippines returning from abroad and non-resident citizens coming to resettle in
the Philippines; Provided, that such goods are exempt from custom duties under
the Tariff and Customs Code of the Philippines;
d. Importation of professional instruments and implements, tools of trade,
occupation or employment, wearing apparel, domestic animals, and personal and
household effects ( except vehicles, vessels, aircrafts machineries and other
similar goods for use in manufacture which are subject to duties, taxes and other
charges) belonging to persons coming to settle in the Philippines or Filipinos or
their families and descendants who are now residents or citizens of other
countries, such parties hereinafter referred to as overseas Filipinos, in quantities
and of the class suitable to the profession, rank or position of the persons
importing said items, for their own use and not barter or sale, accompanying
such persons, or arriving within a reasonable time; Provided, That the Bureau of
Customs may, upon the production of satisfactorily evidence that such persons
are actually coming to settle in the Philippines and that the goods are brought
from their place of residence, exempt such goods from payment of duties and
taxes.
e. Services subject to percentage tax under Title V of the Tax Code, as amended;
f. Services by agricultural contract growers and milling for others of palay into rice,
corn into grits, and sugar cane into raw sugar;
g. Medical, dental, hospital and veterinary services except those rendered by
professionals;
h. Educational services rendered by private educational institutions duly accredited
by the Department of Education (DepED), the Commission on Higher Education
(CHED) and the Technical Education and Skills Development Authority (TESDA)
and those rendered by the government educational institutions;
i. Services rendered by individuals pursuant to an employer-employee relationship;
j. Services rendered by regional or area headquarters established in the
Philippines by multinational corporations which act as supervisory,
communications and coordinating centers for their affiliates, subsidiaries or
branches in the Asia-Pacific Region and do not earn or derive income from the
Philippines;
k. Transactions which are exempt under international agreements to which the
Philippines is a signatory or under special laws except those granted under P.D.
No. 529 - Petroleum Exploration Concessionaires under the Petroleum Act of
1949;
l. Sales by agricultural cooperatives duly registered and in good standing with the
Cooperative Development Authority (CDA) to their members, as well as of their
produce, whether in its original 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 and/or
processing of their produce;
m. Gross receipts from lending activities by credit or multi-purpose cooperatives duly
registered and in good standing with the Cooperative Development Authority;
n. Sales by non-agricultural, non-electric and non-credit cooperatives duly
registered with and in good standing with CDA; Provided, that the share capital
contribution of each member does not exceed Fifteen Thousand Pesos
(P15,000.00) and regardless of the aggregate capital and net surplus ratably
distributed among the members;
o. Export sales by persons who are not VAT-registered;
p. The following sales of real properties:
o Sale of real properties not primarily held for sale to customers or held for
lease in the ordinary course of trade or business.
o Sale of real properties utilized for low-cost housing as defined by RA No.
7279, otherwise known as the "Urban Development and Housing Act of 1992"
and other related laws, such as RA No. 7835 and RA No. 8763;
o Sale of real properties utilized for specialized housing as defined under RA
No. 7279, and other related laws, such as RA No. 7835 and RA No. 8763,
wherein price ceiling per unit is Php 450,000.00 or as may from time to time
be determined by the HUDCC and the NEDA and other related laws;
o Sale of residential lot valued at One Million Five Hundred Thousand Pesos
(P1,500,000.00) and below, or house and lot and other residential dwellings
valued at Two Million Five Hundred Thousand Pesos (P2,500,000.00) and
below, as adjusted using latest Consumer Price Index values. (If two or
more adjacent lots are sold or disposed in favor of one buyer, for the purpose
of utilizing the lots as one residential lot, the sale shall be exempt from VAT
only if the aggregate value of the lots do not exceed One Million Five Hundred
Thousand Pesos (P1,500,000.00). Adjacent residential lots, although
covered by separate titles and/or separate tax declarations, when sold or
disposed to one and the same buyer, whether covered by one or separate
Deed of Conveyance, shall be presumed as a sale of one residential lot.)
q. Lease of residential units with a monthly rental per unit not exceeding Fifteen
Thousand Pesos (P15,000.00), regardless of the amount of aggregate rentals
received by the lessor during the year; Provided, that not later than January 31,
2009 and every three (3) years thereafter, the amount of P10,000.00 shall be
adjusted to its present value using the Consumer Price Index, as published by
the Philippine Statistics Authority (Formerly known as NSO);
r. Sale, importation, printing or publication of books and any newspaper, magazine,
review or bulletin which appears at regular intervals with fixed prices for
subscription and sale and which is not devoted principally to the publication of
paid advertisements;
s. Transport of passengers by international carriers;
t. Sale, importation or lease of passenger or cargo vessels and aircraft, including
engine equipment and spare parts thereof for domestic or international transport
perations; Provided, that the exemption from VAT on the importation and local
purchase of passenger and/or cargo vessels shall be subject to the requirements
on restriction on vessel importation and mandatory vessel retirement program of
Maritime Industry Authority (MARINA);
u. Importation of fuel, goods and supplies by persons engaged in international
shipping or air transport operations; Provided, that the said fuel, goods and
supplies shall be used exclusively or shall pertain to the transport of goods
and/or passenger from a port in the Philippines directly to a foreign port, or vice-
versa, without docking or stopping at any other port in the Philippines unless the
docking or stopping at any other Philippine port is for the purpose of unloading
passengers and/or cargoes that originated form abroad, or to load passengers
and/or cargoes bound for abroad; Provided, further, that if any portion of such
fuel, goods or supplies is used for purposes other that the mentioned in the
paragraph, such portion of fuel, goods and supplies shall be subject to 12% VAT;
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; and
w. Sale or lease of goods and services to senior citizens and persons with
disabilities, as provided under Republic Act Nos. 9994 (Expanded Senior
Citizens Act of 2010) and 10754 (An Act Expanding the Benefits and Privileges
of Persons with Disability), respectively;
x. Transfer of property in merger or consolidation (pursuant to Section 40(C)(2) of
the Tax Code, as amended);
y. Association dues, membership fees, and other assessments and charges
collected on a purely reimbursement basis by homeowners’ associations and
condominium established under Republic Act No. 9904 (Magna Carta for
Homeowners and Homeowner’s Association) and Republic Act No. 4726 (The
Condominium Act), respectively;
z. Sale of gold to the Banko Sentral ng Pilipinasn (BSP) (previously zero-rated
transaction);
o Sale of drugs and medicines prescribed for diabetes, high cholesterol, and
hypertension (beginning on January 1, 2019 as determined by the
Department of Health); an
o Sale or lease of goods or properties 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 Three Million Pesos (Php
3,000,000.00). Note: Self-employed individuals and professionals availing of
the 8% on gross sales and/or receipts and other non-operating income, under
Sections 24 (A)(2)(b) and 24 (A)(2)(c)(2) of the NIRC shall also be exempt
from the payment of twelve (12%) VAT.
What is the difference between a low-cost and a socialized housing?
 “Low-cost housing” refers to housing projects intended for homeless low-
income family beneficiaries, undertaken by the Government or private
developers, which may either be a subdivision or a condominium registered and
licensed by the Housing and Land Use Regulatory Board/Housing (HLURB)
under BP Blg. 220, PD No. 957 or any other similar law, wherein the unit selling
price is within the selling price per unit as set by the Housing and Urban
Development Coordinating Council (HUDCC) pursuant to RA No. 7279 otherwise
known as the “Urban Development and Housing Act of 1992” and other laws.
 “Socialized housing” refers to housing programs and projects covering houses
and lots or home lots only undertaken by the Government or private sector for
the underprivileged and homeless citizens which shall include sites and services
development, long-term financing, liberated terms on interest payments, and
such other benefits in accordance with the provision or RA No. 7279, otherwise
known as the “Urban Development and Housing Act of 1992” and RA No. 7835
and RA No. 8763. It shall also refer to projects intended for the underprivileged
and homeless wherein the housing package selling price is within the lowest
interest rates under the Unified Lending Program (UHLP) or any equivalent
housing program of the Government, the private sector or non-government
organizations.
II. RELIEF-Related Queries
What is "RELIEF"?
RELIEF means Reconciliation of Listing for Enforcement. It supports the third
party information program of the Bureau through the cross referencing of third party
information from the taxpayers' Summary Lists of Sales and Purchases prescribed to be
submitted on a quarterly basis.
Who are required to submit Summary List of Sales?
VAT taxpayers with quarterly total sales/receipts (net of VAT), exceeding Two
Million Five Hundred Thousand Pesos (P2,500,000.00) are required to submit a
Summary List of Sales.
Who are required to submit Summary List of Purchases?
VAT taxpayers with quarterly total purchases (net of VAT) of goods and services,
including importation exceeding One Million Pesos (P1,000,000.00) are required to
submit Summary List of Purchases.
What are the Summary Lists required to be submitted?
 Quarterly Summary List of Sales to Regular Buyers/ Customers Casual Buyers/
Customers and Output Tax
 Quarterly Summary of List of Local Purchases and Input tax; and
 Quarterly Summary List of Importation.
When is the deadline for submission of the above Summary Lists?
The Summary List of Sales/Purchases, whichever is applicable, shall be
submitted on or before the twenty-fifth (25th) day of the month following the close of the
taxable quarter -- calendar quarter or fiscal quarter.
What are the penalties for failure to submit the Summary Lists?
 For failure to file, keep or supply a statement, list or information required on the
date prescribed shall pay and administrative penalty of One Thousand Pesos
(P1,000.00) for each such failure, unless it is shown that such failure is due to
reasonable cause and not to willful neglect; and
 An aggregate amount to be imposed for all such failures during a taxable year
shall not exceed Twenty-Five Thousand Pesos (P25,000.00).
III. What is the treatment for Withholding of VAT on Government Money
Payments?
 The government or any of its political subdivisions, instrumentalities or agencies,
including government-owned or controlled corporations (GOCCs) shall, before
making payment on account of each purchase of goods and/or services taxed at
twelve percent (12%) VAT pursuant to Sections 106 and 108 of the Tax Code,
deduct and withhold a Final VAT due at the rate of five percent (5%) of the gross
payment.
 The five percent (5%) final VAT withholding rate shall represent the net VAT
payable of the seller. The remaining seven percent (7%) effectively accounts for
the standard input VAT for sales of goods or services to government or any of its
political subdivisions, instrumentalities or agencies including GOCCs in lieu of the
actual input VAT directly attributable or ratably apportioned to such sales. Should
actual input VAT attributable to sales to government exceed seven percent (7%)
of gross payments, the excess may form part of the sellers' expense or cost. On
the other hand, if actual input VAT attributable to sale to government is less than
seven percent (7%) of gross payment, the difference must be closed to expense
or cost.
 The government or any of its political subdivisions, instrumentalities or agencies
including GOCCs, as well as private corporation, individuals, estates and trusts,
whether large or non-large taxpayers, shall withhold twelve percent (12%) VAT
with respect to the following payments:
 Lease or use of properties or property rights owned by non-residents; and

 Other services rendered in the Philippines by non-residents.
IV. In what grounds can the Commissioner of Internal Revenue suspend the
business operations of a taxpayer?
The Commissioner or his authorized representative is empowered to suspend the
business operations and temporarily close the business establishment of any person for
any of the following violations:
a. In the case of a VAT-registered Person:
 Failure to issue receipts or invoices;
 Failure to file a value-added-tax return as required under Section 114; o
 Understatement of taxable sales or receipts by thirty percent (30%) or more of
his correct taxable sales or receipts for the taxable quarter.
b. Failure to any Person to Register as Required under Section 236
 The temporary closure of the establishment shall be for the duration of not
less than five (5) days and shall be lifted only upon compliance with whatever
requirements prescribed by the Commissioner in the closure order.
BIR Form No. 2551M- Monthly Percentage Tax Return
Percentage tax is a business tax imposed on persons, entities, or transactions
specified under Sections 116 to 127 of the National Internal Revenue Code of 1997
(also known as Tax Code), as amended, and as required under special laws.
This return shall be filed in triplicate by the following:
1. Persons whose gross annual sales and/or receipt do not exceed P1,500,000 and
who are not VAT-registered persons;
2. Domestic carriers and keepers of garages, except owners of bancas and owners
of animal-drawn two wheeled vehicles;
3. Operators of international air and shipping carriers doing business in the
Philippines;
4. Franchise grantees of gas or water utilities;
5. Franchise grantees of radio and/or television broadcasting companies whose
gross annual receipts of the preceding year do not exceed Ten Million Pesos
(P10,000,000.00) and did opt to register as VAT taxpayers;
6. Banks, non-bank financial intermediaries and finance companies;
7. Life insurance companies; and
8. Agent of foreign insurance companies.
Filing Date
BIR Form No. 2551Q- Quarterly Percentage Tax Return

This return shall be filed in triplicate by the following:
1. Persons whose gross annual sales and/or receipts do not exceed P 3,000,000 and
who are not VAT-registered persons.
2. Domestic carriers and keepers of garages, except owners of bancas and owners of
animal-drawn two wheeled vehicles.
3. Operators of international air and shipping carriers doing business in the Philippines.
4. Franchise grantees of gas or water utilities.
5. Franchise grantees of radio and/or television broadcasting companies whose gross
annual receipts of the preceding year do not exceed Ten Million Pesos (P 10,000,000)
and did not opt to register as VAT taxpayers.
6. Franchise grantees sending overseas dispatch, messages or conversations from the

Philippines, except on services involving the following:
a. Government of the Philippines - for messages transmitted by the Government
of the Republic of the Philippines or any of its political subdivisions and
instrumentalities;
b. Diplomatic Services - for messages transmitted by any embassy and consular
offices of a foreign government;
c. International organizations - for messages transmitted by a public international
organization or any of its agencies based in the Philippines enjoying privileges and
immunities pursuant to an international agreement; and
d. News services - for messages from any newspaper, press association, radio
or television newspaper, broadcasting agency, or news ticker service to any other
newspaper, press association, radio or television newspaper broadcasting agency or
news ticker services or to bonadife correspondents, which messages deal exclusively
with the collection of news items for, or the dissemination of news items through, public
press, radio or television broadcasting or a newsticker service furnishing a general news
service similar to that of the public press.
7. Proprietors, leases or operators of cockpits, cabarets, night or day clubs, boxing
exhibitions, professional basketball games, jai-alai and racetracks.
8. Banks, non-bank financial intermediaries and finance companies.
9. Life insurance companies.
10. Agents of foreign insurance companies.
How to file/pay?
1. BIR Form 2551Q - Quarterly Percentage Tax Return Form
2. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if
applicable
4. For amended return, proof of payment and the return previously filed
5. Authorization letter, if filed by an authorized representative
6. Copy of Certificate of Registration issued by Cooperative Development Authority
for cooperatives, and from the National Electrification Administration for electric
cooperatives
Procedures
1. For Manual filing and/or payment:
a) Download the newly-revised BIR Form 2551Q pdf file format under the BIR
Forms-VAT/Percentage Tax Returns section of the BIR website.
b) Properly fill-up BIR Form 2551Q in triplicate copies.
c) Proceed to any Authorized Agent Bank (AAB)located within the territorial
jurisdiction of the Revenue District Office (RDO) where the taxpayer is
registered and present the duly accomplished BIR Form 2551Q and other
requirements. If paying manually, present the aforementioned documents
together with BIR-prescribed deposit slip, and payment to the respective AAB.
The Quarterly Percentage Tax shall be paid at the time the return is filed by
the taxpayer.
d) In places where there are no AABs, the duly accomplished BIR Form 2551Q,
together with the required attachments and payment, shall be filed/paid with
the Revenue Collection Officer (RCO), thru the Mobile Revenue Collection
Officers System (MRCOS) facility, or duly Authorized Treasurer of the city or
municipality where said business or principal place of business / where the
taxpayer is registered, who will issue an Electronic Revenue Official Receipt
(eROR).
e) Receive copy of BIR Form 2551Q duly validated/stamp-received by the
AAB/RCO/authorized City or Municipal Treasurer.
f) Manual Filers who want to pay online can pay through GCash Mobile
Payment, LandBank of the Philippines (LBP) Linkbiz Portal (for taxpayers
who have ATM account with LBP/Bancnet ATM or Debit Card), or DBP Tax
Online (for holders of VISA/Master Credit Card/Bancnet ATM or Debit Card).
2. For eFPS filing and/or payment:
a) Use the existing and enhanced old BIR Form 2551Q in the eFPS system
which contains all the alphanumeric tax codes (ATCs) enumerated in the said
form in filing the return.
b) Taxable amount to be indicated in the quarterly percentage return shall be the
total gross sales/receipts for the quarter.
c) In case percentage taxes for the first, second and/or third month of the
quarter had been paid, payment/s made are to be reflected in BIR Form
2551Q in Item No. 20A-Creditable Percentage Tax Withheld per BIR Form
2307.
d) After e-filing, proceed to online payment by clicking the proceed to payment
button and pay the quarterly percentage tax due.
3. For eBIRForms filing and/or payment:
a) Use the existing enhanced old BIR Form 2551Q in Offline eBIRForms Package
V7, which contained all the alphanumeric tax codes (ATCs) enumerated in BIR
Form 2551M in filing the return.
b) Taxable amount to be indicated in the quarterly percentage return shall be the
total gross sales/receipts for the quarter.
c) In case percentage taxes for the first, second and/or third month of the quarter
had been paid, payment/s made are to be reflected in BIR Form 2551Q in Item
No. 20A-Creditable Percentage Tax Withheld per BIR Form 2307.
d) Proceed to any AAB located within the territorial jurisdiction of the RDO where
the taxpayer is registered and present the duly accomplished BIR Form 2551Q
and other requirements. If there is payment that will be done manually, present
the aforementioned documents together with BIR-prescribed deposit slip, and
payment to the respective AAB. The Percentage Tax shall be paid at the time the
return is filed by the taxpayer.
e) In places where there are no AABs, the duly accomplished BIR Form 2551Q,
together with the required attachments and payment, shall be filed/paid with the
RCO, thru the MRCOS facility, or duly Authorized Treasurer of the city or
municipality where said business or principal place of business / where the
taxpayer is registered, who will issue an Electronic Revenue Official Receipt
(eROR).
f) eBIRForms Filers who want to pay online can pay through GCash Mobile
Payment, LandBank of the Philippines (LBP) Linkbiz Portal (for taxpayers who
have ATM account with LBP/Bancnet ATM or Debit Card), or DBP Tax Online
(for holders of VISA/Master Credit Card/Bancnet ATM or Debit Card).
Note: "No payment" returns filed late will result on imposition by the RDO of penalties,
which shall be paid at the concerned AAB.
Filing Date
The return shall be filed and the tax paid within twenty-five (25) days after the
end of each taxable quarter.
BIR Form No. 1601-C- Monthly Remittance Return of Income Taxes Withheld on
Compensation
This return shall be filed in triplicate by every Withholding Agent (WA)/payor
required to deduct and withhold taxes on compensation paid to employees.
PERSONS REQUIRED TO WITHHOLD WITHHOLDING TAXES
c. Individuals engaged in business or practiced of profession
d. Non-individuals (corporations, associations, partnertship, cooperatives) whether
engaged in business or not
e. Government agencies and its instrumentalities (National Government Agentcies
(NGAs), Government-owned or Controlled Corporations (GOCCs), Local
Government Units including Baranggays (LGUs
A WITHHOLDING AGENT - is any person or entity who is in control of the payment
subject to withholding tax and therefore is required to deduct and remit taxes withheld to
the government.
IMPORTANCE OF WITHHOLDING TAX SYSTEM

It is considered as an effective tool in the collection of taxes for the following reasons:
 It encourages voluntary compliance;
 It reduces cost of collection effort;
 It prevents delinquencies and revenue loss; and
 It prevents dry spell in the fiscal conditions of the government by providing
revenues throughout the taxable year.
CLASSIFICATION OF WITHHOLDING TAXES
Creditable withholding tax
a. Compensation - is the tax withheld from income payments to individuals arising
from an employer-employee relationship.
b. Expanded - is a kind of withholding tax which is prescribed on certain income
payments and is creditable against the income tax due of the payee for the
taxable quarter/year in which the particular income was earned.
c. Withholding Tax on GMP - Value Added Taxes (GVAT) - is the tax withheld by
National Government Agencies (NGAs) and instrumentalities, including
government-owned and controlled corporations (GOCCs) and local government
units (LGUs), before making any payments to VAT registered
taxpayers/suppliers/payees on account of their purchases of goods and services.
d. Withholding Tax on Government Money Payments (GMP) - Percentage
Taxes - is the tax withheld by National Government Agencies (NGAs) and
instrumentalities, including government-owned and controlled corporations
(GOCCs) and local government units (LGUs), before making any payments to
non-VAT registered taxpayers/suppliers/payees
e. Final Withholding Tax is a kind of withholding tax which is prescribed on certain
income payments and is not creditable against the income tax due of the payee
on other income subject to regular rates of tax for the taxable year. Income Tax
withheld constitutes the full and final payment of the Income Tax due from the
payee on the particular income subjected to final withholding tax.
WITHHOLDING TAX ON COMPENSATION
Compensation or Wages - refers to all remuneration for services performed by an
employee for his employer under an employee-employer relationships unless exempted
by the NIRC and pertinent laws.
KINDS OF COMPENSATION
 Regular
a. Basic Salary
b. Fixed allowances
 Supplmentary
a. Commission
b. Overtime pay
c. Fees, including director’s fees
d. Profit sharing
e. Monetized vacation leaves in excess of ten (10) days
f. Sick leave
g. Fringe benefits received by rank and file employees
h. Hazard pay
i. Taxable 13th month pay and other benefits
j. Other remuneration received from an employee-employer relationship
Filing Date
BIR Form No. 0619-E- Monthly Remittance Form for Creditable Income Taxes
Withheld (Expanded)
This monthly remittance form shall be filed in triplicate by every withholding
agent/payor required to deduct and withhold taxes on income payments subject to
Expanded/Creditable Withholding Taxes.
EXPANDED WITHHOLDING TAX
The Withholding of Creditable Tax at Source or simply called Expanded
Withholding Tax is a tax imposed and prescribed on the items of income payable to
natural or juridical persons, residing in the Philippines, by a payor-corporation/person
which shall be credited against the income tax liability of the taxpayer for the taxable
year.
Filing Date
Manual Filers
This form shall be filed and the tax remitted on or before the 10th day following the
month in which withholding was made. This shall be filed for the first two (2) months of
each calendar quarter.
eFPS Filers
In accordance with the schedule set forth in RR No. 26-2002 as follows:
Group A: Fifteen (15) days following the month in which withholding was made
Group B: Fourteen (14) days following the month in which withholding was made
Group C: Thirteen (13) days following the month in which withholding was made
Group D: Twelve (12) days following the month in which withholding was made
Group E: Eleven (11) days following the month in which withholding was made
BIR Form No. 1601-EQ- Quarterly Remittance Return of Creditable Income Taxes
Withheld (Expanded)
This quarterly withholding tax remittance return shall be filed in triplicate by every
Withholding Agent (WA)/payor required to deduct and withhold taxes on income
payments subject to Expanded / Creditable Withholding Taxes.
Filing Date
This quarterly withholding tax remittance return shall be filed and the tax
paid/remitted not later than the last day of the month following the close of the quarter
during which withholding was made.
BIR Form No. 0619-F- Monthly Remittance Form for Final Income Taxes Withheld
This monthly remittance form shall be filed in triplicate by every withholding
agent/payor required to deduct and withhold taxes on income payments subject to Final
Withholding Taxes.
FINAL WITHHOLDING TAX
The amount of income tax withheld by the withholding agent is constituted as a
full and final payment of income tax due from the payee of the said income.
The liability for payment of tax rests primari;y on the payor as a withholding agent.
Failure to withhold the tax or in case of under withholding, the deficiency tax shall be
collected from payor/withholding agent.
The payee is not required to file an income tax return for the particular income.
Filing Date
Manual Filers
This form shall be filed and the tax remitted on or before the 10th day following
the month in which withholding was made. This shall be filed for the first two (2) months
of each calendar quarter.
eFPS Filers
In accordance with the schedule set forth in RR No. 26-2002 as follows:
Group A:Fifteen (15) days following the month in which withholding was made
Group B: Fourteen (14) days following the month in which withholding was mad
Group C: Thirteen (13) days following the month in which withholding was mad
Group D: Twelve (12) days following the month in which withholding was made
Group E: Eleven (11) days following the month in which withholding was made
BIR Form No. 1601-FQ- Quarterly Remittance Return of Final Income Taxes
Withheld
This quarterly withholding tax remittance return shall be filed in triplicate by every
Withholding Agent (WA)/payor required to deduct and withhold taxes on income
payments subject to Final Withholding Taxes.
Filing Date
This quarterly withholding tax remittance return shall be filed and the tax
paid/remitted not later than the last day of the month following the close of the quarter
during which withholding was made.
INCOME TAX
Income Tax is a tax on a person's income, emoluments, profits arising from
property, practice of profession, conduct of trade or business or on the pertinent items
of gross income specified in the Tax Code of 1997 (Tax Code), as amended, less the
deductions if any, authorized for such types of income, by the Tax Code, as amended,
or other special laws.
Who are Required to File Income Tax Returns?
1. Individuals
 Resident citizens receiving income from sources within or outside the Philippines
 Employees deriving purely compensation income from two or more
employers, concurrently or successively at any time during the taxable year
Employees deriving purely compensation income regardless of the amount,
whether from a single or several employers during the calendar year, the
income tax of which has not been withheld correctly (i.e. tax due is not equal
to the tax withheld) resulting to collectible or refundable return
 Self-employed individuals receiving income from the conduct of trade or
business and/or practice of profession
 Individuals deriving mixed income, i.e., compensation income and income
from the conduct of trade or business and/or practice of profession
 Individuals deriving other non-business, non-professional related income in
addition to compensation income not otherwise subject to a final tax
 Individuals receiving purely compensation income from a single employer,
although the income of which has been correctly withheld, but whose spouse
is not entitled to substituted filing
 Non-resident citizens receiving income from sources within the Philippines
 Aliens, whether resident or not, receiving income from sources within the
Philippines
2. Non-Individuals
 Corporations including partnerships, no matter how created or organized.
 Domestic corporations receiving income from sources within and outside the
Philippine
 Foreign corporations receiving income from sources within the Philippines
 Estates and trusts engaged in trade or business
BIR Form 1701 - Annual Income Tax Return Individuals, Estates and Trusts
 Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if
applicable
 Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form
 Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
 Duly approved Tax Debit Memo, if applicable
 Proof of Foreign Tax Credits, if applicable
 Income Tax Return previously filed and proof of payment, if filing an amended
return for the same year
 Account Information Form (AIF) or the Certificate of the independent Certified
Public Accountant (CPA) with Audited Financial Statements if the gross annual
sales, earnings, receipts or output exceed three million pesos (P3,000,000.00)
 Account Information Form or Financial Statements not necessarily audited by an
independent CPA if the gross annual sales, earnings, receipts or output do not
exceed P3,000,000.00 and is subject to graduated income tax rates under
Section 24(A)(2)(a)
 Proof of prior year’s excess tax credits, if applicable
Procedures
1. For eFPS Filer
 Fill-up applicable fields in the BIR Form No. 1701
 Pay electronically by clicking the “Proceed to Payment” button and fill-up the
required fields in the “eFPS Payment Form” then click “Submit” button.
 Receive payment confirmation from eFPS-AABs for successful e-filing and e-
payment.
2. For Non-eFPS Filer
 Fill-up fields in the BIR Form No. 1701 in the downloaded Electronic Bureau of
Internal Revenue Form (eBIRForm) Package
 Print the duly accomplished BIR Form No. 1701
 Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the
Revenue District Office where you are registered and present the duly
accomplished BIR Form 1701, together with the required attachments and your
payment.
 In places where there are no AABs, proceed to the Revenue Collection Officer or
duly Authorized City or Municipal Treasurer located within the Revenue District
Office where you are registered and present the duly accomplished BIR Form
1701, together with the required attachments and your payment.
 Receive your copy of the duly stamped and validated form from the teller of the
AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. For Manual Filer
 Fill-up the BIR Form No. 1701 in triplicate copies.
 Proceed to the Revenue District Office where you are registered or to any Tax
Filing Center established by the BIR and present the duly accomplished BIR
Form 1701, together with the required attachments.
 Receive your copy of the duly stamped and validated form from the RDO/Tax
Filing Center representative.
Deadline
Final Adjustment Return or Annual Income Tax Return - On or before the 15th
day of April of each year covering income for calendar year 2018 and thereafter
BIR Form No. 1701Q- Quarterly Income Tax Return for Individuals, Estates and
Trusts
This return shall be filed in triplicate by the following individuals regardless of
amount of gross income:
1) A resident citizen engaged in trade, business, or practice of profession within and
without the Philippines.
2) A resident alien, non-resident citizen or non-resident alien individual engaged in
trade, business or practice of profession within the Philippines.
3) A trustee of a trust, guardian of a minor, executor/administrator of an estate, or any
person acting in any fiduciary capacity for any person, where such trust, estate, minor,
or person is engaged in trade or business.
1. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
3. Proof of other payment/s made, if applicable
Procedures
a. For eFPS Filer
1. Fill-up applicable fields in the BIR Form No. 1701Q
2. Pay electronically by clicking the “Proceed to Payment” button and fill-up the
required fields in the “eFPS Payment Form” then click “Submit” button.
3. Receive payment confirmation from eFPS-AABs for successful e-filing and e-
payment.
b. For Non-eFPS Filer
1. Fill-up applicable fields in the BIR Form No. 1701Q in the downloaded
Electronic Bureau of Internal Revenue Form (eBIRForm) Package
2. Print the duly accomplished BIR Form No. 1701Q
3. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of
the Revenue District Office where you are registered and present the duly
accomplished BIR Form 1701Q, together with the required attachments and
your payment.
4. In places where there are no AABs, proceed to the Revenue Collection
Officer or duly Authorized City or Municipal Treasurer located within the
accomplished BIR Form 1701Q, together with the required attachments and
your payment.
5. Receive your copy of the duly stamped and validated tax return and BIR
prescribed deposit slip from the teller of the AABs or Electronic Revenue
Official Receipt (eROR) from the Revenue Collection Officer/duly Authorized
City or Municipal Treasurer.
c. For Manual Filer
1. Fill-up the BIR Form No. 1701Q in triplicate copies (Compensation Income
need not be reported in the Quarterly Income Tax Return and is to be
declared only on the Annual Income Tax Return).
2. Proceed to the Revenue District Office where you are registered or to any Tax
Form 1701Q, together with the required attachments.
3. Receive your copy of the duly stamped and validated form from the RDO.
Filing Date
BIR Form 1702 - Annual Income Tax Return (For Corporations and Partnerships)
 Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form
 Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
 Duly approved Tax Debit Memo, if applicable
 Proof of Foreign Tax Credits, if applicable
 Income tax return previously filed and proof of payment, if amended return is filed
for the same taxable year
 Account Information Form (AIF) or the Certificate of the independent CPA with
Audited Financial Statements, if the gross annual sales, earnings, receipts or
output exceed P3,000,000.
 Proof of prior year’s excess tax credits, if applicable
Procedures
1. For eFPS Filer
a. Fill-up applicable fields in the BIR Form No. 1702
b. Pay electronically by clicking the “Proceed to Payment” button and fill-up
the required fields in the “eFPS Payment Form” then click “Submit” button.
c. Receive payment confirmation from eFPS-AABs for successful e-filing and
e-payment.
a. Fill-up fields in the BIR Form No. 1702 in the downloaded Electronic
Bureau of Internal Revenue Form (eBIRForm) Package
b. Print the duly accomplished BIR Form No. 1702
c. Proceed to the nearest Authorized Agent Bank (AAB) under the
jurisdiction of the Revenue District Office where you are registered and
present the duly accomplished BIR Form 1702, together with the required
attachments and your payment.
d. In places where there are no AABs, proceed to the Revenue Collection
accomplished BIR Form 1702, together with the required attachments and
your payment.
e. Receive your copy of the duly stamped and validated form from the teller
of the AABs/Revenue Collection Officer/duly Authorized City or Municipal
Treasurer.
3. For Manual Filer
a. Fill-up the BIR Form No. 1702 in triplicate copies.
b. Proceed to the Revenue District Office where you are registered or to any
Tax Filing Center established by the BIR and present the duly
accomplished BIR Form 1702, together with the required attachments.
c. Receive your copy of the duly stamped and validated form from the
RDO/Tax Filing Center representative.
Deadline
Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of
the fourth month following the close of the taxpayer’s taxable year
BIR Form No. 1702Q- Quarterly Income Tax Return for Corporations, Partnerships
and Other Non-Individual Taxpayers
This return is filed quarterly by every corporation, partnership, joint stock
companies, joint accounts, associations (except foreign corporation not engaged in
trade or business in the Philippines and joint venture or consortium formed for the
purpose of undertaking construction projects or engaging in petroleum, coal, geothermal
and other energy operations), government-owned or controlled corporations, agencies
and instrumentalities.
1. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
3. Previously filed return, if an amended return is filed for the same quarter
Procedures
1. For eFPS Filer
a. Fill-up applicable fields in the BIR Form No. 1702Q
b. Pay electronically by clicking the “Proceed to Payment” button and fill-up
the required fields in the “eFPS Payment Form” then click “Submit” button.
c. Receive payment confirmation from eFPS-AABs for successful e-filing and
e-payment.
a. Fill-up applicable fields in the BIR Form No. 1702Q in the downloaded
Electronic Bureau of Internal Revenue Form (eBIRForm) Package
b. Print the duly accomplished BIR Form No. 1702Q
c. Proceed to the nearest Authorized Agent Bank (AAB) under the
jurisdiction of the Revenue District Office where you are registered and
present the duly accomplished BIR Form 1702Q, together with the
required attachments and your payment.
d. In places where there are no AABs, proceed to the Revenue Collection
accomplished BIR Form 1702Q, together with the required attachments
and your payment.
e. Receive your copy of the duly stamped and validated tax return and BIR
prescribed deposit slip from the teller of the AABs or Electronic Revenue
Official Receipt (eROR) from the Revenue Collection Officer/duly
Authorized City or Municipal Treasurer.
3. For Manual Filer
a. Fill-up the BIR Form No. 1702Q in triplicate copies.
b. Proceed to the Revenue District Office where you are registered or to any Tax
Form 1702Q, together with the required attachments.
c. Receive your copy of the duly stamped and validated form from the RDO.
Filing Date
The corporate quarterly income tax return shall be filed with or without payment
within sixty (60) days following the close of each of the first three (3) quarters of the
taxable year whether calendar or fiscal year.
1) What is income?
Income means all wealth which flows into the taxpayer other than as a mere
return of capital.
2) What is Taxable Income?
Taxable income means the pertinent items of gross income specified in the Tax
Code as amended, less the deductions, if any, authorized for such types of income, by
the Tax Code or other special laws.
3) What is Gross Income?
Gross income means all income derived from whatever source.
4) What comprises gross income?
Gross income includes, but is not limited to the following:
 Compensation for services, in whatever form paid, including but not limited to
fees, salaries, wages, commissions and similar items
 Gross income derived from the conduct of trade or business or the exercise of
profession
 Gains derived from dealings in property
 Interest
 Rents
 Royalties
 Dividends
 Annuities
 Prizes and winnings
 Pensions
 Partner's distributive share from the net income of the general professional
partnerships
5) What are some of the exclusions from gross income?
 Life insurance
 Amount received by insured as return of premium
 Gifts, bequests and devises
 Compensation for injuries or sickness
 Income exempt under treaty
 Retirement benefits, pensions, gratuities, etc.
 Miscellaneous items
 Income derived by foreign government
 Income derived by the government or its political subdivision
 Prizes and awards in sport competition
 Prizes and awards which met the conditions set in the Tax Code
 13th month pay and other benefits not exceeding P90,000
 GSIS, SSS, Medicare and other contributions
 Gains from the sale of bonds, debentures or other certificate of indebtedness
with a maturity of more than five (5) years
 Gains from redemption of shares in mutual fund
6) What are the allowable deductions from gross income?
a) *Optional Standard Deduction - an amount not exceeding 40% of the gross
sales/receipts for individuals and gross income for corporations; or
b) Itemized Deductions which include the following:
- Expenses
- Interest
- Taxes
- Losses
- Bad Debts
- Depreciation
- Depletion of Oil and Gas Wells and Mines
- Charitable Contributions and Other Contributions- Research and Development
- Pension Trusts
* Not allowed to non-resident alien individual
* A General Professional Partnership (GPP) may avail of the OSD only once, either by
the GPP or the partners comprising the partnership
7) Who are not required to file Income Tax returns?
a. An individual earning purely compensation income whose taxable income does not
exceed P250,000.00
b. An individual whose income tax has been withheld correctly by his employer,
provided that such individual has only one employer for the taxable year
c. An individual whose sole income has been subjected to final withholding tax or who is
exempt from income tax pursuant to the Tax Code and other special laws.
d. An individual who is a minimum wage earner
e. Those who are qualified under “substituted filing”. However, substituted filing applies
only if all of the following requirements are present:
- the employee received purely compensation income (regardless of amount) during the
taxable year;
- the employee received the income from only one employer in the Philippines during
the taxable year;
- the amount of tax due from the employee at the end of the year equals the amount of
tax withheld by the employer;
- the employee’s spouse also complies with all 3 conditions stated above;
- the employer files the annual information return (BIR Form No. 1604-CF); and
- the employer issues BIR Form No. 2316 (Oct 2002 ENCS version) to each employee.
8.) Who are exempt from Income Tax?
a. Income from abroad of a non-resident citizen who is:
i. A citizen of the Philippines who establishes to the satisfaction of the
Commissioner the fact of his physical presence abroad with a definite intention to
reside therein
ii. A citizen of the Philippines who leaves the Philippines during the taxable year
to reside abroad, either as an immigrant or for employment on a permanent basis
iii. A citizen of the Philippines who works and derives income from abroad and
whose employment thereat requires him to be physically present abroad most of
the time during the taxable year
iv. A citizen who has been previously considered as a non-resident citizen and
who arrives in the Philippines at any time during the year to reside permanently
in the Philippines will likewise be treated as a non-resident citizen during the
taxable year in which he arrives in the Philippines, with respect to his income
derived from sources abroad until the date of his arrival in the Philippines.
b. Overseas Filipino Worker, including overseas seaman
An individual citizen of the Philippines who is working and deriving income from
abroad as an overseas Filipino worker is taxable only on income from sources within the
Philippines; provided, that a seaman who is a citizen of the Philippines and who
receives compensation for services rendered abroad as a member of the complement
of a vessel engaged exclusively in international trade will be treated as an overseas
Filipino worker.
NOTE: A Filipino employed as Philippine Embassy/Consulate service personnel of the
Philippine Embassy/consulate is not treated as a non-resident citizen; hence, his
income is taxable.
c. General Professional Partnership
d. Government Service Insurance System (GSIS)
e. Social Security System (SSS)
f. Philippine Health Insurance Corporation (PHIC)
g. Local Water Districts (LWD)
9) What are the procedures in filing Income Tax returns (ITRs)?
a. For “with payment” ITRs (BIR Form Nos. 1700 / 1701 / 1701Q / 1702 / 1702Q / 1704)
File the return in triplicate (two copies for the BIR and one copy for the taxpayer)
with the Authorized Agent Bank (AAB) of the place where taxpayer is registered or
required to be registered. In places where there are no AABs, file the return directly with
the Revenue Collection Officer or duly Authorized Treasurer of the city or municipality in
which such person has his legal residence or principal place of business in the
Philippines, or if there is none, filing of the return will be at the Office of the
Commissioner.
b. For “no payment” ITRs -- refundable, break-even, exempt and no
operation/transaction, including returns to be paid on 2nd installment and returns paid
through a Tax Debit Memo(TDM)
File the return with the concerned Revenue District Office (RDO) where the
taxpayer is registered. However, "no payment" returns filed late shall not be accepted
by the RDO but instead, they shall be filed with an Authorized Agent Bank (AAB) or
Collection Officer/Deputized Municipal Treasurer (in places where there are no AABs),
for collection of necessary penalties.
What is a General Information Sheet?
The General Information Sheet is a document embodying certain information
about the corporation which is signed and attested to by the Corporate Secretary and
usually filed annually with the SEC.
It is mandatory for a corporation to submit its GIS.
Section 177 of Republic Act No. 11232, otherwise known as the Revised
Corporation Code of the Philippines, mandates all corporations to submit annually a
General Information Sheet (“GIS”) with the Securities and Exchange Commission
(SEC). The GIS is a document embodying certain information about the corporation
which is signed and attested to by the Corporate Secretary. The SEC collects this
information in the GIS for regulatory purposes based on the SEC’s mandate to ensure
full and timely disclosure of material information, protect investors and minimize
fraudulent or manipulative devices and practices that distort the free market.
Additionally, it is also used to detect and prevent money laundering.
Pursuant to SEC Memorandum Circular No. 1, series of 2019, all corporations
shall file their GIS within 30 calendar days from:
1. Stock Corporations – date of actual annual stockholders’ meeting
2. Non-stock Corporations – date of actual annual members meeting
3. Foreign Corporations – anniversary date of the issuance of the SEC License
In view of the community quarantine imposed in the Philippines, the SEC issued
its Notice dated 31 March 2021 and adjusted the abovementioned deadlines. Thus, as it
stands at present, the GIS must be submitted within ninety (90) calendar days after the
Annual Stockholders’ Meeting or Annual Members’ Meeting of the Directors, Trustees
and Officers of the corporation, as fixed in the bylaws or as determined by the Board of
Directors/Trustees.
If there is any change in the directors, trustees or officers due to death,
resignation election, or cessation of office outside the usual annual meeting, such
changes must be reported within thirty (30) calendar days from the occurrence of the
incident through an Amended GIS.
Late filing or failure to file the GIS will result in the imposition of fines on the
erring corporation.
The GIS must be submitted electronically with the SEC using its OST.
In adherence to the implementation of the Online Submission Tool (OST) of the
SEC as provided for under Memorandum Circular No. 3, series of 2021, the GIS must
be submitted electronically to the SEC. Thus, corporations are mandated to enroll in the
SEC OST in order to access and submit its reports. As for non-stock corporations, they
are given the option of whether they will enroll and submit their GIS through the OST or
proceed to the SEC to submit their GIS over the counter. Nevertheless, by 2022, all
corporations, whether stock or non-stock, shall be required to enroll and submit their
reports through the OST.
Contents of the GIS
The following data are usually required in filling up the GIS:
 Corporate and Trade Name
 SEC Registration Number
 Date of Annual meeting as per bylaws
 Actual date of annual meeting
 Principal Address
 Corporate Tax Identification Number
 Fiscal Year End
 Website
 E-mail address
 Name of External Auditor and its Signing Partner
 Industry Classification
 Intercompany affiliations
 Authorized, subscribed and paid-up capital of the corporation with percentage of
foreign equity
 Name, address, nationality and TIN of Directors and Officers
 Name, address, nationality, TIN and subscribed shares of stock of the
stockholders
 Other investments of the corporation
 Declared dividends in the immediately past year
 Secondary license information
 Certification by the Corporate Secretary
Just recently, the SEC mandated that the Beneficial Ownership Declaration be
included in the GIS. The beneficial owners must be identified. The term “beneficial
owner” refers to any natural person who ultimately owns, controls or exercises ultimate
effective control over the corporation.
Who are required to file General Form Financial Statements?
The SEC has a mandate to implement the provisions of the Corporation Code.
Consistent with this, and considering the need of data that serves as inputs to different
statistical frameworks compiled by other government institutions, the submission of
GFFS (and SFFS) is mandated.
In this regard, SEC Memorandum Circular No. 6, Series of 2006 was issued to
set out the requirement of filing the GFFS (and SFFS), in electronic format (diskette or
compact disk). This applies to:
 Domestic Stock Corporations with annual gross sales or gross revenue of at
least P5 million
 Investment Companies and Publicly-held Companies
 Investment Houses or Underwriters of Securities
 Pre-need Plan Companies
 Brokers or Dealers in Securities
 Financing Companies
 Government Eligible Securities Dealers
 Transfer Agents
 Other Market Participants and Self-regulatory Organizations
Consequently, banks, insurance companies, non-stock corporations, branch and
representative offices of foreign corporations, and regional headquarters and regional
operating headquarters of multinational companies are not covered by this requirement.
Content and submission of General Form Financial Statements
In accordance with the SEC Memorandum Circular (MC) No. 6, Series of 2006,
the electronic format of the GFFS (or SFFS) shall be submitted within 30 days from the
last day of submission of the Audited Financial Statements (AFS). This means that the
electronic submission of the GFFS (or SFFS) must be on a diskette or a compact disk
(CD)
Also mentioned under the same circular that the document needs to be
submitted shall be accompanied by a certification (notarized) by the Treasurer, Chief
Financial Officer, or a person occupying an equivalent rank in the company. That
person shall certify under oath that, except for detailed breakdown required in the GFFS
(or SFFS), the GAAP prescribed accounts and figures provided in the electronic
documents are based on the contents of the annual audited financial statements
submitted to the SEC.
MC28
MC 28-2020 requires every entity under the jurisdiction and supervision of the
SEC to submit valid official and alternate e-mail addresses and cellphone numbers in
the form prescribed by the issuance. The submission must be accompanied by an
Authorization or Certification of Authorization, which should be signed by the duly
authorized representative or the corporate secretary, as the case may be.
Corporations, associations, partnerships, and individuals may file the
forms/notices of the MC 28-2020 online through the email platform
MC28_S2020@sec.gov.ph.
Filing of the forms/notices beyond June 30, 2021 shall be considered as non-
compliant and will be subject to penalty in the amount of P10,000.
https://www.bir.gov.ph/index.php/tax-information/value-added-tax.html
https://www.bir.gov.ph/index.php/bir-forms/income-tax-return.html#itr1701q
https://www.bir.gov.ph/index.php/bir-forms.html
https://www.bir.gov.ph/index.php/tax-information.html
https://ndvlaw.com/what-is-a-general-information-sheet/
https://philcpa.org/2020/08/remember-to-file-your-general-form-financial-statements-
gffs/

VAT Compliance Requirements

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VAT Compliance Requirements

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TAX COMPLIANCE MONITORING

BIR Form 2550M - Monthly Value-Added Tax Declaration

BIR Form No. 2550Q- Quarterly Value-Added Tax Return

What is the liability of a VAT-registered person in the issuance of a VAT invoice/

o The right or privilege to use in the Philippines of any industrial, commercial or

What comprises "sale or exchange of services"?

c. Services rendered to persons or entities whose exemption under special laws or

6. Processing, manufacturing or repacking goods for other persons doing business

 Lease or use of properties or property rights owned by non-residents; and

BIR Form No. 2551Q- Quarterly Percentage Tax Return

6. Franchise grantees sending overseas dispatch, messages or conversations from the

IMPORTANCE OF WITHHOLDING TAX SYSTEM

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