SALE OF GOODS OR PROPERTIES
BUSINESS TAXATION
SALE OF GOODS OR PROPERTIES
These are the gross sales or gross receipts
of a VAT-registered business including barter,
exchange of goods or leasing out of property and
supply of services in the course of business which
are subject to 12% VAT.
The following are the transactions included under
this category:
1. Sales of
▪ Goods or properties; and
▪ Services of VAT-registered business, other
than those Zero-VAT Rated, VAT-exempt, or
those under title V, Other Percentage tax.
2. On deemed sales consummations or transfers
by VAT-registered business
Vatable transactions
Not allowed with input VAT Credit
In general, these are the transactions of
Non-VAT registered business with annual sales or
gross receipts exceeding the adjusted threshold
amount of P3,000,000.
They are VAT-registrable persons because
they failed to register under VAT system. These
transactions are subject to 12% regular output VAT
but not allowed to deduct input VAT.
Transactions not allowed to deduct Input VAT
▪ Non-VAT business with sales or gross receipts of
more than P3,000,000 per year which are not
among the VAT-exempt and not among those
exclusively subject to OPT.
▪ Non-VAT franchise grantees of radio and
television broadcasting with annual gross
receipts of more than P10,000,000.
▪ Importation, except those which are specifically
exempted under Sec. 4 109-1 of Rev. Reg. 16-
2005
▪ Local payment of rent of vessel or carriers
owned by nonresident foreign entity.
GOODS OR PROPERTIES
Goods or properties shall mean all tangible
and intangible objects which are capable of
pecuniary estimation and shall include:
▪ Real properties held for sale
▪ 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.
▪ The right or privilege to use any industrial,
commercial or scientific equipment in the
Philippines
▪ Radio, television, satellite transmission and
cable television time.
Taxable Base on Sale of Goods or Properties
Taxable base is the amount or value on
which the VAT rate will be applied in computing
the output tax.
1. Gross Selling price
Gross selling price shall include
▪ The purchase price
▪ Charges for packing, delivery and
insurance
▪ Excise taxes if goods are subject to
excise tax
2. Actual selling price is used if one of the parties
in the sales transaction is the government.
 Allowable deductions from Gross Selling Price

▪ Sales returns and allowances

▪ Sales discounts

VAT on Sale of Goods or Properties

Goods or properties include all tangible and

intangible objects that are capable of monetary
estimation. To be subject to business tax, the sale
must be related to business or trade.

The sale should be consummated in the

Philippine regardless of the terms of payment made
between the contracting parties. Such sale of a VAT-
registered person is generally subject to 12% VAT
rate.

Inventory used for Promotions and Office supplies

Inventories or goods given for free in the

course of business in order to promote sales efforts
are not considered deemed sales transactions

Sale of Scrap Materials

Sale of scrap materials (by a VAT-registered

person) such as empty drums, plastic bags, cartons,
and wood crates; obsolete inventories and fully
depreciated fixed assets sold at minimal prices or
lower than purchase price are subject to VAT.

SALE OF REAL PROPERTY

Taxable Base:
Gross selling price in sale of real property
means the consideration stated in the sales
documents or the fair market value, whichever is
higher.

Fair market value shall mean whichever is

higher between
▪ FMV as determined by the Commissioner
(zonal value)
▪ The FMV as shown in real property tax
declaration.