VALUE ADDED TAX

NATURE OF VAT
 A business tax. In effect, a sales tax.
 Indirect tax – burden can be shifted
by the seller to the buyer.
Imposed:
 On the gross selling price if
sale, barter, or exchange of
goods or properties or DETERMINATION OF TAX
 On the gross receipts if the
1.If the amount provided is exclusive of
sale of services, or in the VAT, that amount is simply multiplied by
lease or use of properties 12% to arrive at the amount of VAT;
  in the course of trade or
business; 2.If the amount provided is inclusive of VAT,
 On the total value or landed
that amount is divided by 112% and then
cost, if importation of goods, multiplied by 12% to arrive at the amount
whether or not in the course of VAT.
of business.
Characteristics of Value Added Tax
Generally, there must be an actual sale of
1. It is a tax on the value added of a
goods, properties or services in the
taxpayer. 
Philippines in order that value added tax
2. It is collected through the “tax
may be imposed, except: 
credit method” or “invoice method” 
3. It is a transparent form of sales a. Importation (Sec. 105, NIRC) 
tax.  b. Erroneous issuance of VAT invoice
4. It is a broad-based tax on or receipt for VAT-exempt sale of
consumption of goods, properties or goods, properties or services (Sec.
services in the Philippines as it 113[D], NIRC) 
applies to all stages of manufacture, c. Deemed sales of goods or
production, and distribution of properties (Sec. 106[B], NIRC)
goods and services. 
5. It is an indirect tax.  “In the Course of Trade or Business”
6. The Philippine adopted the Defined
“separate indication of tax The phrase “in the course of trade or
method.”  business” means the regular conduct or
7. There is no cascading in the value pursuit of a commercial or an economic
added tax system.  activity including transactions incidental
thereto, by any person regardless of
How Computed?  whether or not the person engaged therein
Tax Credit Method: Output Tax less Input is a non-stock, non-profit private
Tax organization (irrespective of the disposition
of its net income and whether or not it sells
Sometimes called “invoice method” refers exclusively to members or their guests), or
to the manner by which the value added tax government entity. 
of a taxpayer is computed. The input taxes
shifted by the sellers to the buyer are The rule of regularity, to the contrary
credited against the buyer’s output taxes notwithstanding, services defined in the Tax
when he in turn sells the taxable goods, Code rendered in the Philippines by non-
properties or services (Sec. 105 and 110[A]. resident foreign persons shall be considered
NIRC) as being rendered in the course of trade or
business (Sec. 105, NIRC).
“Incidental” means depending upon or pension houses, inns, resorts;
appertaining to something else as primary; (theatres and movie houses); 
something necessary appertaining to or h. Proprietors, operators of
depending upon another which is termed restaurants, refreshment parlors,
the principal (Words & Phrase, 1940, Vol. cafes and other eating places,
20, p. 419).   including clubs and caterers; 
i. Dealers in securities;
Goods or Properties j. Lending investors; 
The term “good or properties” refer to all k. Transportation contractors
tangible and intangible objects which are on their transport of goods or
capable of pecuniary estimation and shall cargoes including persons who
include, among others:  transport goods or cargoes for hire
and other domestic common
a. Real properties held primarily for carriers by land, relative to their
sale to customers or held for lease in transport of goods or cargoes; 
the ordinary course of trade or l. Common carriers by air and sea
business  relative to their transport of
passengers, goods or cargoes from
b. The right or the privilege to use
one place in the Philippines to
patent, copyright, design or model,
another place in the Philippines; 
plan, secret formula or process,
m. Sale of electricity by generation,
goodwill, trademark, trade brand or
transmission, and/or distribution
other like property or right; 
companies, including electric
c. The right or the privilege to use cooperatives; 
any industrial, commercial or n. Services of franchise grantees of
scientific equipment;  electric utilities, telephone and
telegraph, radio and television
d. The right or the privilege to use broadcasting and all other franchise
motion picture films, films, tapes grantees, except those under
and discs;  Section 119 of the Tax Code; 
o. Non-life insurance companies
e. Radio, television, satellite (except their crop insurance),
transmission and cable television including surety, fidelity, indemnity
time. and bonding companies; 
p. Similar services regardless of
whether or not the performance
Sale or Exchange of Services thereof calls for the exercise or use
Sale or exchange of services means the of the physical or mental faculties. 
performance of all kinds of services in the
Philippines for others for a fee, The phrase “sale or exchange of services”
remuneration or consideration, whether in shall likewise include:
kind or in cash, including those performed (1) The lease or the use of or the
or rendered by: right or privilege to use any
a. Construction and service copyright, patent, design or model,
contractors;  plan secret formula or process,
b. Stock, real estate, commercial, goodwill, trademark, trade brand or
customs and immigration brokers;  other like property or right; 
c. Lessors of property, whether (2) The lease or the use of, or the
personal or real;  right to use industrial, commercial
d. Persons engaged in warehousing or scientific equipment; 
services; (3) The supply of scientific, technical,
e. Lessors or distributors of industrial or commercial knowledge
cinematographic films;  or information; 
f. Persons engaged in milling, (4) The supply of any assistance that
processing, manufacturing or is ancillary and subsidiary to and is
repacking goods for others; furnished as a means of enabling the
g. Proprietors, operators or keepers application for enjoyment of any
of hotels, motels, rest houses, such property, or right as is
 mentioned in subparagraph (2) or
any such knowledge or information
as is mentioned in subparagraph
(3); 
(5) 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
nonresident person. 
(6) 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; 
(7) The lease of motion picture files,
films, tapes and discs; and 
(8) The lease or the use of or the
right to use radio, television,
satellite transmission and cable
television time.

Lease of properties shall be subject to the

tax herein imposed irrespective of the place
where the contract of lease or licensing
agreement was executed if the property is
leased or used in the Philippines.

Requisites for taxability of services 

1. The services must be performed

or is to be performed in the course
of trade or business in the
Philippines, except in the case of
service done in the Philippines by a Effect of Failure to Register by Persons
non-resident person under Section Required to Do So
105 of the 1997 Tax Code;  1) Liable to VAT on their sales;
2. For a valuable consideration 2) No input VAT credits on their purchases;
actually or constructively received;
and  3) Cannot separately bill output VAT to
customer. In other words, the taxpayer
3. The service is not exempt under cannot shift the VAT burden to his
the Tax Code, special law, or customers.
international agreement. 
4) Fines and sanctions (OPLAN KANDADO:
suspensions of operations or closure of
business ≥5 days).

Cancellations of Registration
A VAT-registered person may cancel his
VAT-registration if: 
1) He makes a written application showing
that his gross sales or receipts (excluding
exempt sales) in the next 12 months shall government entity is liable to pay VAT on
not exceed ₱3,000,000; or  the sale of goods or services. As long as
entity provides goods or services for a fee,
2) He ceases business  remuneration or consideration, then such
sale is subject to VAT.
3) There is a change in ownership in the
case of a single proprietorship;  ZERO-RATED TRANSACTIONS
 - Does not result in output VAT, but the
4) Dissolution of the partnership or taxpayer is entitled to input VAT which shall
corporation  be available either as a tax credit or as a
refund, IF taxpayer is registered. 
5) Merger or consolidation with respect to
the dissolved corporation;  - IF not registered, the sales of the taxpayer
will be considered VAT-exempt sales.
6) Failure to actually start business 
 Zero-Rated Sales of Goods
(a) Export sales of goods 
7) Business becomes exempt; 
1) Sales of goods to a foreign
country and paid for in acceptable
8) A person who voluntarily registers and
foreign currency; 
then applies for cancellation after the lapse
2) Sale of raw materials or packaging
of 3 years; 
materials to a non-resident buyer
for delivery to a resident export
9) A VAT-registered person whose gross
oriented enterprise, and paid for in
sales or receipts for 3 consecutive years did
acceptable foreign currency; 
not exceed ₱3,000,000 beginning January 1,
3) Sale of raw materials or packaging
2018. 
materials to export-oriented
enterprises whose export sales
Persons Subject to VAT 
exceed 70% of total annual
production; 
1. Those engaged in the selling or leasing of
4) Considered export sales under
goods, properties, or services subject to
E.O. No. 226 the Omnibus
VAT and registered regardless of the level of
Investment Code), and other special
sales;
laws: 
(a) Sales to bonded
2. Those engaged in the selling or leasing of
manufacturing warehouses
goods, properties or services subject to
of export-oriented
VAT, whose gross sales or receipts during
manufacturers; 
the year or in any 12-month period > ₱
(b) Sales to registered export
3,000,000, whether or not registered; Note:
traders operating bonded
For purposes of the threshold of
trading warehouses
₱3,000,000, husband and wife shall be
supplying raw materials in
considered separate taxpayers.
the manufacture of export
products; 
3. Those who are VAT-registered and who
(c) Sales to BOI-registered
have VAT-exempt businesses which they
producer whose products are
choose to register under the VAT-system,
100% exported.
regardless of level of sales;
 5) Sales of goods, supplies,
4. Franchise grantees of radio and/or TV
equipment, and fuel to persons
broadcasting whose gross annual receipts
engaged in international shipping or
do not exceed ₱10 Million, but are
international air transport
registered;
operations. Provided, that the sale
of such goods and fuel shall pertain
5. Importers of goods, whether or not in the
to the transport of goods and
course of trade or business, regardless of
passengers from a Philippine port
the amount of ,purchase.
directly to a foreign port, or vice-
versa, without docking or stopping
Note: Unless specifically exempted by law,
at any other in the Philippines.
even a non-stock, non-profit organization or
 Note: The transactions under items
(2), (3) and (4) above shall be
subject to the 12% VAT, shall no
longer be considered export sales
subject to 0% VAT, upon the
satisfaction of the following
conditions:  which are paid for in acceptable
(1) The successful
establishment and
implementation of an
enhanced VAT refund system
that grants refunds of
creditable input taxes within
ninety (90) days from the
filing of the VAT refund
application with the Bureau;
and  international
(2) All pending VAT refund
claims as of December 31,
2017 shall be fully paid in
cash by December 31, 2019.
(b) Effectively zero-rated sales
Local sales by VAT-registered persons to
persons or entities deemed tax-exempt
(i.e., granted exemption from indirect taxes)
under a special taxes) under a special law or
international agreement, such as: 
(1) Enterprises registered with the
SBMA, CDA, PEZA, and other export
processing zones;  production;
(2) Services other than those in (1),
rendered to a person engaged in
business conducted outside the
Philippines, or to a non-resident
person not engaged in business and
who is outside the Philippines, and
foreign currency;
(3) Services rendered to
persons/entities whose exemption
under special laws or international
agreements effectively subjects the
supply of such services to a 0% rate;
(4) Services rendered to persons
engaged in international shipping or
air transport
operations, including leases
property for use thereof; Provided,
that the sale of services shall pertain
to the transport of goods and
passengers from a Philippine port
directly to a foreign port, or vice-
versa
(5) Services performed by
subcontractors or contractors in
processing converting, or
manufacturing goods for an
enterprise whose export sales
exceed 70% of total annual
 

(2) ADB;IRRI  (6) Transport of passengers and

cargo by domestic air or sea carriers
(3) Sales to diplomatic missions and from the Philippine to a foreign
other agencies or instrumentalities country. Note: Transport of
granted tax immunities;  passengers and cargo by domestic
air or sea carriers from a foreign
(4) Regional or area headquarters of country to the Philippines is EXEMPT
(RHQs) of multinational corporations from business taxes including the
enjoying VAT 0-rating on its VAT for lack of jurisdiction. 
purchases at the time of effectivity
of the TRAIN; and  (7) Sale of power or fuel generated
through renewable sources of
(5) Other persons/entities who are
energy such as solar, wind, biomass
entitled to 0% VAT on purchases
geothermal, and ocean energy.
Zero-Rated Sales of Services Note: Zero-rating does not extend to
The following services performed locally in the sale of services related to
the Philippines by VAT-registered persons maintenance or operating of plants
shall be subject to a 0% rate:  generating said energy.
(1) Processing, manufacturing or
repacking goods for other persons Note: Zero-rating does not extend to
which goods are subsequently the sale of services related to
exported, and which are paid for in maintenance or operating of plants
acceptable foreign currency; generating said energy.
 

Note: The transactions under items (1) and
(5) above shall be subject to the 12% VAT,
and shall no longer subject to 0% VAT rate,
upon the satisfaction of the following
conditions:  - Does not include fighting cocks, race
(1) The successful establishment and
implementation of an enhanced VAT
refund system that grants refunds of
creditable input taxes within ninety
(90) days from the filing of the VAT
refund application with Bureau; and  2) Sale or importation of (a)
(2) All pending VAT refund claims as
of December 31,2017 shall be fully
paid in cash by December 31, 2019.
EXEMPT TRANSACTIONS 
- The sale shall not be subject to output
VAT, but the seller is not allowed any ITC. -
Seller cannot bill any output VAT to his
customers. 
- If the seller issues a VAT invoice or receipt
without being VAT-registered, he shall be
liable to the output VAT without the benefit
of any input VAT credit.
1) Sale or importation of  Philippines: Provided, that such
(a) agricultural and marine
food products in their
original state,  4) Importation of (a)
(b) livestock or poultry of a
kind generally used as, or
yielding or producing foods
for human consumption;
and  effects (except any vehicle, aircraft,
(c) breeding stock and
genetic materials therefor;
“Original State”  commercial quantities), belonging to
– Meat, fruit, fish, vegetables, and other
agricultural and marine food products
classified under this paragraph shall be
considered in their original state even if
they have undergone the simple processes
of preparation or preservation for the
market, such as freezing, drying, salting,
broiling, roasting, smoking, or stripping,
including those using advanced
technological means of packaging, such as
shrink wrapping in plastics, vacuum packing,
tetra-pack, and other similar packaging
methods; 
- Polished and /or husked rice, corn grits,
raw cane sugar and molasses, ordinary salt,
and copra shall be considered in their
original state. “Livestock or Poultry” 
horses, zoo animals, and other animals
generally considered as pets. Notes: a) Sale
of bagasse is not exempt from VAT. b) Fresh
water is not an agricultural product, but is
considered a mineral. The sale thereof is
not exempt from VAT. 
fertilizers; (b) seeds, seedlings, and
fingerlings; (c) 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
generally considered as pets); 
3) Importation of personal and
household effects belonging to the
residents of the Philippines
returning from abroad, and non-
resident citizens coming to the
goods are exempt from Philippine
customs duties;
professional instruments and
implements; (b) tools of trade,
occupation or employment; (c)
wearing apparel; (d) domestic
animals; and € personal household
machinery, and other goods for use
in the manufacture and
merchandise of any kind in
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 for sale,
barter, or exchange, accompanying
such persons, or arriving within a
reasonable time; 
5) Services subject to percentage tax
under Title V of the Tax Code (Secs.
116-127, Tax Code); 
6) Services by agricultural contract
growers, and milling for others of
palay into rice, corn into grits, and
sugar cane into raw sugar; 7)
Medical, dental, hospital, and
veterinary services except those
rendered by professionals; Note: Lab
services are exempt.
7) Medical, dental, hospital, and
veterinary services except those
rendered by professionals. Note: Lab
services are exempt. Sale of drugs
and medicines are VATable,
generally. Therefore, if the hospital
or clinic operates a drug store, the
sale of drugs and medicine shall be
subject to VAT. However, the sale of
the same to inpatients are
considered part of hospital services,
and shall therefore be VAT- exempt.
8) Educational services rendered by
private educational institutions, duly
accredited by the Department of
Education (“DepEd”), the
Commission on Higher Education
(“CHED”), the Technical Education
and Skills Development Authority
(“TESDA”), and those rendered by
government educational
institutions;
9) Services rendered by individuals
pursuant to an employer-employee
relationship  registered with National
10)Services rendered by regional or
area headquarters (“RHQs”)
established in the Philippines by
multinational corporations which act
as supervisory, communications, and
coordinating enters for their
affiliates, subsidiaries, or branches in
the Asia-Pacific Region, and do not
earn or derive income from the
Philippines;  renewable sources of energy
11)Transactions which are exempt
under international agreements to
which the Philippines is a signatory
or under special laws, except those
under PD 529;  using technologies such as
12)Sales by agricultural cooperatives
duly registered with and in good
standing with the Cooperative
Development Authority (“CDA”) to
their members as well as sale of
their produce, whether in its original
state or processed form, to non-
member; and 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; 
13)Gross receipts from lending
activities by credit or multi-purpose
cooperatives duly registered with
and in good standing with the
Cooperative Development
Authority;
14)Sales by non-agricultural, non-
electric, and non-credit cooperatives
duly registered with and in good
standing with the Cooperative
Development Authority; Provided,
that the share capital contribution of
each member does not exceed
Fifteen Thousand Pesos (₱15,000). 
Notes: 
a) Importation by non-
agricultural, non-electric, and
non-credit cooperatives of
machineries and equipment,
including spare parts thereof
to be used by them are
subject to VAT. 
b) All electric cooperatives
Electrification Administration
(“NEA”) shall be subject to
VAT on sales relative to the
generation and distribution
of electricity as well as their
importation of machineries
and equipment, including
spare parts. Provided,
however, that sale of power
or fuel generated through
such as, but not limited to,
biomass, solar, wind,
hydropower, geothermal,
ocean energy, and other
emerging energy sources
fuel cells and hydrogen fuels,
shall be subject to 0% VAT. 
15)Export sales by persons who are
not VAT-registered;
16)The following sales of real
properties are VAT-exempt: 
 (a) Sale of real properties not
primarily held for sale to
customers or held for lease
in the ordinary course of
trade or business;  20)Sale, importation, or lease of
(b) Sale of real properties
utilized for low-cost housing
and socialized housing as
defined by R.A. No. 7279,
and related laws;  importation or purchase meets the
(c) Sale of residential lot
valued at One Million, Five
Hundred Thousand Pesos ( ₱
1,500,000) and below;  supplies by persons engaged in
Note: For purposes of (c) and (d), if two (2)
or more adjacent residential lots, house and
lots, or other residential dwellings are sold
or disposed in favour of one buyer from the
same seller, for the purpose of utilizing the
same as one residential area, the sales shall
be exempt from VAT only if the aggregate
value of the properties do not exceed
₱1,500,000 for residential lots, and
₱2,500,000 for residential house and lots or
other residential dwellings.
17)Lease of a residential unit with a
monthly rental not exceeding
Fifteen Thousand Pesos (₱ 15,000),
regardless of the amount of
aggregate rentals received by the
lessor during the year;  financial intermediaries performing
Note: Lease of residential units with a
monthly rental per unit >₱15,000, but the
annual aggregate of such rentals does not
exceed ₱3,000,000, shall still be exempt
from VAT, but shall be subject to the 3%
percentage tax. If the annual aggregate
exceeds ₱3,000,000, the same shall be
subject to VAT.  services to Senior Citizens and PWDs
18)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;
Note: Sale of books, newspaper,
magazines, etc. in electronic format
are VAT-taxable.
19)Transport of passengers by
international carriers; Note:
Transport of cargo by international
carriers is also exempt from VAT
because they are subject to the OPT
under Section 118 of the Tax Code. 
passenger or cargo vessels and
aircraft, including engine,
equipment, and spare parts thereof
for domestic or international
transport operations; Provided, the
requirements of Maritime Industry
Authority (MARINA).
21)Importation of fuel, goods, and
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 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.
22)Services of banks, non-bank
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;
23) Sales or lease of goods and
as provided under R.A. Nos. 9994
and 10754; 
24)Transfer of property pursuant to
Section 40(C)(2) of the tax Code; 
25)Association dues, membership
fees, and other assessments and
charges collected by homeowners’
associations and condominium
corporations; 
26)Sale of gold to the BSP
27)Sale of drugs and medicines (e) Other sales which are
prescribed for diabetes, high VAT-exempt under special
cholesterol, and hypertension laws.
beginning January1, 2019, as
determined by the Department of (31) Sale or lease of goods or
Health. Note: Only the sale of such properties or the performance of
drugs is VAT-exempt. Importation of services other than the transactions
such drugs is VATABLE.  mentioned in the preceding
paragraphs, the gross annual sales
28)Other VAT-exempt sales; and/or receipts do not exceed the
(a) Fees, per diems, amount of Three Million Pesos (₱
allowances and other income 3,000,000). For purposes of the
received by corporate threshold of ₱3,000,000, the
directors from corporations husband and wife shall be
of which they are not considered separate taxpayers
employees; 
VAT-TAXABLE SALE OF
(b) Sales by PEZA and other GOODS/PROPERTIES
ecozone registered 1) VATatable sales – the sale must be (a) an
enterprises enjoying the actual sale (b) in the course of trade or
preferential tax rate of 5% in business, of goods or properties within the
lieu of all taxes;  commerce of man. 

(c) Sales of services by 2) Transactions deemed sale 

professionals and other – transactions which lack one or both of the
suppliers of services hired elements that makes a sale VATable.
under a contract for service Transactions (a) to (d) below are deemed
or job order with the sales as to prevent the taxpayer from
departments and agencies of evading payment of the output VAT. 
the government, its
instrumentalities, local -entails no actual sale, but by their nature,
government units, state are considered as “sales” subject to VAT
colleges and universities, (a) Transfer, use, or consumption
including GOCCs and not in the course of business of
government financial goods or properties originally
institutions (“GFIs”) shall be intended for sale or for use in the
exempt from VAT.  course of business. Transfer of
goods or properties not in the
Provided, course of business can take place
(1) they derive gross when the VAT-registered person
receipts of not more withdraws goods from his business
than ₱250,000 in any for his personal use. 
12-month period,
(2) such incomes are (b) Distribution or transfer of goods
received from a LONE or properties to: 
PAYOR, and (1) Shareholders or inventors
(3) such professionals as property dividends; or 
have no other source (2) Creditors in payment of
of income.  debt or obligation. 

(d) Amounts of money (c) Consignment of goods if actual

received in trust which do sale is not made within sixty (60)
not belong to the recipient days following the date such goods
and which do not redound to were consigned. Consigned goods
the benefit of the recipient returned by the consignee within
are not subject to VAT.  the 60-day period are not deemed
sold; and 
 (d) Transmission of property to a
trustee IF:
(1) The property transferred
is one for sale, lease, or use
in the ordinary course of
trade or business, and
(2) The transfer constitutes a
completed gift. Transfer is a
completed gift in the
transferor divests himself
absolutely of control over
the property, i.e., an
irrevocable transfer of the
corpus and/or an irrevocable
designation of the
beneficiary. 
(e) Retirement from or cessation of
business with respect to inventories
of taxable goods (capital goods,
stock-in-trade, supplies, materials)
existing as of such retirement or
cessation, whether or not the
business is continued by the new
owner.
Examples of transactions deemed
sale, and therefore VAT-taxable:  price.
a) “Change of ownership of
the business”. There is a
change in the ownership of
the business when a single
proprietorship incorporates,
or the proprietor of a single
proprietorship sells his entire
business.
b) Dissolution of a granted at the time of sale which are
partnership, and creation of
a new partnership which
takes over the business.  the gross sales duly recorded in the
c) Liquidating dividends
where the assets of the
corporation are distributed
to the shareholders.  of which is not dependent upon the
Examples of transactions not
subject to VAT:
1) Change in the control of a
corporation;
- 12% of the gross selling price (“GSP”),
exclusive or net of VAT, of the goods sold,
bartered, exchanged, or deemed sold in the
Philippines, OR 12/112 of the total invoice
price(inclusive or gross of VAT). 
- For 0-rated sales, the output VAT is 0% of
the GSP.
Tax Base: GSP, net of Sales Discounts, Sales
Returns, Allowances
A) GSP = the total amount of money or its
equivalent which the purchaser must pay
the seller in consideration of the sale,
barter, or exchange. Any excise tax shall
from part of the GSP.
When the GSP is unreasonable lower than
the actual market value, the CIR shall, by
rules and regulations prescribed by the
Secretary of Finance, determine the
appropriate tax base. However, when one
of the parties is the government, the output
VAT shall be based on the actual selling
“Unreasonably lower” = lower by more than
30% of the actual market value.
In computing the taxable base during the
month or quarter, the following shall be
allowed as deductions from gross selling
price:
a. Discounts determined and
expressly indicated in the invoice,
the amount thereof forming part of
books of accounts.
b. Sales discount indicated in the
invoice at the time of sale, the grant
happening of a future event, may be
excluded from the gross sales within
the same month/quarter it was
given.

2) Merger or consolidation of
corporations;

3) Change in the trade or corporate

name. 

OUTPUT VAT
For transaction deemed sale:
1) Tax Base = Market value of the
goods at the time of transaction  lots or other
a) Transfer, use, or consumption not
in the course of trade or business;  Notes:
b) Distributions to shareholders or
creditors;  real properties subject to VAT.
c) Consignment sales;
d) Transmission of property to
trustee.  a) Selling price in the
2) Tax Base = Lower of acquisition cost or
current market price of the goods
In retirement from or cessation of business.  c) Assessor’s value
C) When here is a cessation of status as a
VAT-registered person The output tax on
goods or properties originally intended for
sale or for use in business, including capital
goods existing at the time of the change in
or cessation of status of a taxpayer as a
VAT-registered person, shall be based on
the acquisition cost or the current market
price of the goods, whichever is lower.  VAT.
Computation of Input VAT (“ITC”) - The
same rules above are applied, but to
purchases
VAT on Sale of Real Properties
Sale of real properties
(a) held primarily for sale to
customers or
(b) held for lease in the ordinary
course of trade or business of
the seller or
(c) used in trade or business,
shall be subject to VAT:
(1) Regardless of the amount
of the gross selling price, if
the real property is not
residential (i.e.,commercial,
industrial,etc.)
(2) If real property is
residential, it shall be subject
to VAT if the GSP exceeds:
(a) P1,500,000 for
residential lots, or
(b) P2,500,000 for
residential house and
residential dwellings.
(a) In the sale, barter, or exchange of
1) The GSP shall be the
highest of:
sales document; or
b) Zonal value, or
2) If VAT is not billed
separately in the sales
document, the selling price is
deemed inclusive of VAT.
3) If the GSP is based on the
zonal or assessor’s value, the
same is deemed exclusive of
(b) IF Cash sale:
VAT = 12% of highest of (Selling
price, zonal value, or assessor’s
value)
(c) If two (2) or more adjacent
residential lots, house and lots, or
other residential dwellings are sold
or disposed in favour of one buyer
from the same seller , for the
purpose of utilizing the same as one
residential area, the sales shall be
VAT-taxable if the aggregate value
of the properties exceed P1,500,000
for residential lots, and P2,500,000
for residential house and lots or
other residential dwellings; 
 (d) The sale of parking lots is subject
to VAT regardless of the amount of
the selling price since parking lots
are not residential lots.  or cargoes from one place in the
(e) VAT may likewise be imposed in
foreclosure sales. When the
mortgagor fails to redeem the real
property which was an ordinary
asset in his hands, the VAT must be
paid by the mortgagor on or before
the 20th day or 25th day of the
month following when the right of
redemption prescribes.
VAT-TAXABLE SALE OF SERVICES  transmission, and/or distribution
- Sale of services or lease or use of
properties (real, tangible personal,
intangible), or supply of knowledge,
information, or assistance.
Requisites of a VAT-Taxable Sale of Services
1) The sale must be conducted in the
ordinary course of trade or business;
2) For leases, the property must be
leased or used in the Philippines;
3) The seller or lessor is VAT-
registered, or if not, the gross
receipts of the seller or lessor during
the year or any 12-month period
exceed the minimum of gross
receipts of gross receipts of
P3,000,000; and
4) In the case of lease of a
residential unit, the monthly rental
exceeds P12,000, and the aggregate
annual gross aggregate gross
receipts of the lessor (from all
residential units with monthly
rentals exceeding P15,000) exceed
P3,000,000
Taxable Services
All kinds of services in the Philippines for a
consideration, as long as it is not exempted
by law. - Includes:  b) Franchise grantees of gas
1) Sales of 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;  subject
2) Sales of domestic common
carriers by air and sea relative to
their transport of passengers, goods,
Philippines to another place in the
Philippines; Notes: a) Common
carriers by land with respect to their
gross receipts from the transport of
passengers, shall not be liable to
VAT, but to the percentage tax
under Section 117. b) Additional
charge for excess baggage is subject
to VAT
3) Sales of electricity by generation,
companies;
a) Gross receipts refers to
the amounts charged by
generation, transmission by
any entity including the
National Grid Corporation of
the Philippines, and
distribution companies
including electric
cooperatives;
b) The universal charge
passed on and collected by
distribution companies and
electric cooperatives shall be
excluded from the
computation of the gross
receipts.
c) Sale of power or fuel
generated thru renewable
sources of energy shall be
subject to 0% VAT.
4) Sales of franchise grantees of
electric utilities, telephone and
telegraph, radio and/or television
broadcasting and all other franchise
grantees, except
a) 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),
and water utilities; Subject to
OPT (franchise tax) under
Sec. 119
c) Amounts received for
overseas dispatch, message,
or conversation originating
from the Philippines are
to the 10%
 percentage tax under Section
120 of the Tax Code.
Note: PAGCOR is not subject
to VAT on the sale of its
services (PAGCOR vs.
Commissioner (G.R. No.
172087, March 15, 2011)
5) Non-life insurance companies
including companies including
surety, fidelity, indemnity, and
bonding companies;
Gross receipts = premiums collected
whether paid in money, notes,
credits, or any substitute for money,
but does not include:
a) Premiums from crop
insurance
b) Reinsurance premiums
c) Returned premiums
(premiums refunded within 6
months after payment on
account of rejection)
d) DST and local taxes passed
on by the isurance company
to the insured.
Notes: Insurance and
reinsurance commissions,
whether life or non-life, are
subject to VAT
6) Lease of properties
a) Regardless of place where
contract is executed as long
as leased is located in the
Philippines.
b) Any advance shall be
subject to VAT if the same
constitutes prepaid rental. If
the same constitutes a loan,
option money, or security
deposit, it shall not be
subject to VAT.
c) The VAT on the rentals or
royalties payable to a non-
resident owner or non-
resident lessor shall be
withheld by the lessee or
licensee in behalf of the non-
resident and remitted to the
BIR.
7) Dealers in securities Gross
receipts = Gross selling price less
cost of the securities sold.
8) Pre-need companies Gross
receipts = premiums or payments
received from the plan holders
9) HMOs- Gross receipts = service
fees = enrollment fees + other
charges received from their
members
Computation of Output VAT:
12% of the gross receipts, net of VAT OR
12/112 of the total invoice amount, gross of
VAT
“Gross receipts” refers to the total amount
of money or its equivalent representing the
contract price,
compensation, service fee, rental or royalty,
including
(a) The amount charged for
materials supplied with the services,
(b) Deposits applied as payments for
services rendered, and
(c) Advance payments
Actually or constructively received during
the taxable period for the services
performed or to be performed for another
person.
Notes:
(1) “Constructive receipts” occurs
when the money consideration or its
equivalent is placed at the control of
the person who rendered the
services without restrictions by the
payor.
(2) Under the definition of “gross
receipts”, any amount forming part
of the contract price, not actually or
constructively received, is not
subject to VAT. Thus, receivables
under the contract shall be taxed in
the month or quarter when
payment is received, actually or
constructively.
(3) “Gross Receipts” do not include
amounts earmarked for payment to
unrelated third parties or received
as reimbursement for advance
payment on behalf of another which
do not redound to the benefit of the
payor
Consequences of Issuing Erroneous VAT
Invoice or VAT Official Receipts
(a) If a person who is not VAT-
registered issues an invoice or
receipt showing his TIN, followed by
the word “VAT”, the erroneous
issuance shall result to the
following:
 (1) The non-VAT person shall
be liable to:
(i) The other
applicable percentage
taxes;
(ii) The VAT due on
the transaction
without the benefit of
input tax credit; and
(iii) A 50% surcharge
under Sec. 248 (B) of
the Tax Code.
(2) The VAT shall be
recognized as an input tax
credit to the purchaser,
provided the requisite
information is shown on the
invoice or receipt.
(b) If a VAT-registered person issues
a VAT invoice or VAT official receipt
for a VAT-exempt transaction, and
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 VAT thereon. The
purchaser shall be entitled to claim
an input tax credit on his purchase.
VAT ON IMPORTATION
Importer
1) Any person who brings goods into
the Philippines, whether or not in
the course of trade or business; or  Sources/Classification of Input Tax Credits
2) A non-exempt person who
acquires tax-free imported goods
from VAT-exempt persons. Such
nonexempt person shall be
considered the importer thereof and
liable for the VAT thereon.
Tax Base
1) The total value used by the
Bureau of Customs in determining
the tariff and customs duties + the
customs duties + excise taxes, if any,
+ other charges, such as postage,
commission and similar charges,
prior to the release of the goods
from customs custody.
2) In case the valuation used by
Bureau of Customs in computing the
duties is based on volume or
quantity of the imported goods, the
landed cost shall be the basis for
computing the VAT. Landed cost
consists of the invoice amount,
customs duties, freight, insurance,
and other charges. If the goods
imported are subject to excise tax,
the excise tax shall form part of the
base; 
3) The same rule applies to technical
importation of goods sold by a
person located in a Special Economic
Zone to a customer located in a
customs territory (i.e., Philippine
territory). 
Payment of VAT on Importation. 
The VAT on importation shall be paid by the
importer prior to the release of the goods
from customs custody. 
INPUT TAX CREDIT 
1) Also called input VAT 
2) VAT due or paid on the importation of
goods or VAT paid by a purchaser (to the
seller) on the local purchases of goods,
properties, or services in the course of trade
or business. Can be availed by a VAT-
register importer, or a VAT-registered
purchaser or goods or services. 
3) Includes transitional input tax and the
presumptive input tax.
1) VAT paid (to the supplier or vendor) by a
VAT-registered person on his local
purchases, and VAT paid (to the BIR) on
importation of goods; 
2) ITC from transactions “deemed
purchase” – The “deemed sale” transaction
will also result in a “deemed purchase”
transaction which gives rise to input tax. 
3) Transaction input tax – Persons allowed
the transitional input tax; Those persons
a) Becoming VAT-registered for the
first time upon exceeding the
minimum gross sales of ₱3,000,000
in any 12-month period or 
b) Who voluntarily register under
the VAT system. 
Transitional input VAT = Higher of
(2% of the value of the beginning
 inventory, or the actual input VAT
aid on such goods, materials, and
supplies) Provided: Inventory shall
exclude goods exempt from VAT.  purchased or imported shall be allowed to
4) Presumptive input tax
a) Available to persons or firms
engaged in the processing of
sardines, mackerel, and milk, and in
the manufacturing of refined sugar,
cooking oil, and packed noodle-
based instant meals.
b) The presumptive input tax shall
be equivalent to 4% of the gross
value in money of their purchases of
primary agricultural products which
are exempt from VAT, and which are
used as inputs in production.
5) Input tax on depreciable goods (deferred
input tax credits) u The purchase or
importation of depreciable capital goods
totaling > ₱ 1,000,000 (exclusive of VAT) in
a calendar month, regardless of the
acquisition cost of each capital good, and
regardless of the terms of payment, shall
give rise to input tax credits as follows:
1) If the estimated useful life of a
capital ≥5 years, the input tax credit
shall be spread over a period of 60
months, and the monthly input tax
credit (“ITC”) shall commence in the
month the capital good was
acquired.  7) Ratable portion of any input tax which
2) If the estimated useful life of a
capital good < 5 years, the input tax
shall be spread evenly by dividing
the input tax by the actual number
of months comprising the estimated
useful life. The claim for ITC shall
commence in the month that the
capital good was acquired.  transaction by a VAT-registered person –
3) If the depreciable capital good is
sold/transferred within a period of
five (5) years or prior to the
exhaustion of the amortizable input
tax thereon, the entire unamortized
input tax on the capital goods
sold/transferred can be claimed as
input tax credit during the
month/quarter when the sale or
transfer is made.
Note: The amortization of the input VAT
provided under Section 110(A)(2) of the Tax
Code shall only be allowed until December
31, 2021. After such date, taxpayers with
unutilized input VAT on capital goods
apply the same as scheduled until fully
utilized.
EXCEPTION: Input taxes on the purchase of
the following non-depreciable vehicles and
all input taxes on the maintenance
expenses shall not be allowed as input tax
credits against the output VAT:
1) Purchases of vehicles for which no
substantiation exists;
2) Purchases of (a) yachts, (b)
helicopters, (c) airplanes, or
aircrafts, and (d) land vehicles for
the use of an official or employee
exceeding ₱2,400,000, unless the
taxpayer’s main line of business is in
transport operations or in leasing
transportation equipment and the
vehicles are used in said operations
6) Input tax on Construction in Progress
(CIP) CIP – cost of construction work which
is not yet completed. It will not be
deprecited until the asset is placed in
service. Input tax credit can be recognized
in the month payment is made. However,
once the asset is completed and reclassified
as a capital asset, no additional ITC can be
claimed. 
cannot be directly attributed to either
taxable or exempt activity 
8) Issuance of a VAT invoice by a non-VAT
person – provided the requisite information
is shown on the invoice or receipt. 
9) Issuance of a VAT invoice on an exempt
provided the requisite information is shown
on the invoice or receipt.
How is an ITC used? 
1) Used as a credit against the output tax to
compute the VAT payable; 
2) Any excess ITC shall be carried over to
the succeeding period; 
3) Input tax attributed to 0-rated sales by a
VAT-registered taxpayer may, at his option,
a) Be applied against the output VAT from
sales of a VATable line of business, or (a) directly attributable and
carried over to the succeeding period; b) Be
refunded; or c) The taxpayer can apply for a (b)ratably allocated, to sales to the
tax credit certificate (“TCC”) which can be government – not allowed as ITCs,
used in the payment of other internal BUT excess over the implied 7%
revenue taxes.  input VAT will be expensed. 

4) Input tax attributable to VAT-exempt 3) Input taxes

sales are expensed
(a) directly attributable and
Determination of ITC in a Taxable
Month/Quarter  (b) ratably allocated, to 0-rated sales
– shall be allowed as ITCs and any
Formula: excess can be carried forward, or
All input taxes arising during the refunded, or applied for a tax credit
month/quarter  certificate (TCC). 
+Input tax carried over from
previous period  REFUND or TAX CREDIT OF INPUT TAX -
+ Deferred ITC Less: Claim for VAT Only VAT-registered persons may apply for
refund or tax credit  issuance of a TCC or refund o the following
Less: Input tax attributable to basis: 
exempt sales 
1) Input taxes paid corresponding to 0-rated
Less: Input tax attributable to final
or effectively o-rated sales; 
withholding tax 
Input tax credit for the month/quarter  2) Unused input taxes as of the date the
retirement from or cessation of business; 
ITCs for VAT-Registered Persons Who Are
Also Engaged in Non-VAT Lines of Business. 3) Unused input taxes due to cessation of
Such taxpayers shall be entitled to the status of a VAT-registered person; 
following ITCs:
1) Input VAT directly attributable to Limitations 
transactions or sales subject to VAT;
1) The input taxes must not have been
2) For input VAT that cannot be applied against output taxes. 
directly attributed to either VAT-
2) The claim for refund or tax credit shall
taxable, VAT-exempt, 0-rated, or
not include the transitional input tax.
Government transactions, only the
ratable portion pertaining to the 3) In the case of export sales, the payments
VAT-taxable and 0-rated must be made in acceptable foreign
transactions may be recognized for currency. 

4) Where the taxpayer is engaged in

VATable (12%23), 0-rated, or exempt sales,
and the amount of creditable input tax
cannot be directly or entirely attributed to
ITCs any one of the transactions, only the
proportionate share of input taxes allocated
to 0-rated sales can be claimed for refund
Notes:  or issuance of a TCC:

1) Input taxes Time for Filing Claim for Refund or Tax

Credit 
(a) directly attributable and
a) For input taxes on zero-rated
(b) ratably allocated, to VAT-exempt sales or less of goods, properties, or
sales – not allowed as ITCs, but shall services: The application should be
be treated as part of costs or filed within two (2) years after the
expenses.  close of the taxable quarter when

2) Input taxes
 such sales were made (Sec. 112,
NIRC).  application within the 90-day period.
b) For unused input taxes upon
retirement, change, or cessation of
status as a VAT-registered person.
The application should be filed
within two (2) years from the date
of cancellation of his VAT
registration (Sec.112, NIRC).  sales, including expenses, shall be recorded
Place of Filing Application or Claim Claims
for refunds/tax credit certificates shall be
filed with the appropriate BIR office (Large
Taxpayer’s Service (“LTS”) or Revenue
District Office (“RDO”)) having jurisdiction
over the principal place of business of the
taxpayer. However, direct exporters shall
file their claim for refund/tax credit
certificate with VAT Credit Audit Division
(“VCAD”). The filing of the claim with one
office shall preclude the filing of the same
claim with another office.  Declaration All persons liable to VAT
(a) The application for refund/TCC must be
supported by complete documents. Failure
to submit the relevant documents in
support of the claim upon filing of the
application shall result in the non-
acceptance thereof.
(b) Prior to the effectivity of TRAIN (January
1, 2018), in case the Commissioner failed to
act on the application within the
prescriptive period, such inaction was
deemed a denial of the application which
gave the applicant the right to appeal to the
CTA. At present, Section 112
(C) of the Tax Code, as amended by R.A.
No. 10963, does not give the same avenue
of appeal to the taxpayer-applicant in cases
where the Commissioner fails to act on the
application. However, such inaction is now
penalized under Section 269 of the Tax
Code. The spectre of a criminal penalty
under Section 269 hopefully encourages BIR
officials to promptly act on a taxpayer’s
 
INCOME TAX ASPECT OF VAT 
Treatment of VAT Under the VAT system,
sales and purchases accounts are taken up
in the books exclusive the VAT. The gross
selling price or gross receipt, and the cost of
in the books net of the VAT, whether or not
the latter is billed separately in the invoices
or receipts. This applies to the computation
of income taxes. For purposes of the
income tax, the sales, cost of sales, and
expense shall be taken up consistently net
of the VAT. 
FILING OF VAT RETURN and PAYMENT OF
VAT 
1) Monthly VAT Return or
shall pay a monthly VAT based on
the taxable receipts and creditable
purchases for the month. BIR Form
2550M – filed not later than the
20th day following the end of the
taxable month - shall be filed only
for the first 2 months of each
quarter. 
2) Quarterly VAT Return or
Declaration All persons liable to VAT
shall file a quarterly return which
shall include sales and purchase
information for the quarter,
including the information for the
first 2 months of the quarter for
which monthly VAT returns have
been filed. BIR Form 2550Q – filed
not later than the 25th day following
the end of the taxable quarter. -
payments made in the 2 previous
monthly VAT returns shall be
credited against the quarterly VAT
payable to arrive at the net VAT
payable (or excess input tax) for the
quarter. 
3) Returns Under the Electronic
Filing and Payment Systems (“EFPS”)
Taxpayers enrolled in the EFPS shall
be required to file their monthly VAT
declarations within 21, 22, 23, 24, or
25 days following the end of each
month, depending on their industry
classification. Payment of the tax
due via the EFPS shall be five (5)
days later than the deadlines for
filing. Note: Beginning January 1,
2023, the filing and payment of VAT
shall be done within 25 days
following the close of each taxable
quarter (Sec. 114 (A) as amended by
the TRAIN).
4) Advance Payment of VAT The
following are subject to the advance
payment of VAT:  other percentage tax of 3%,
(a) Withdrawal of refined
sugar from the mill/refinery
The operator of the sugar
mill or refinery shall not
allow any withdrawal of
refined sugar from its
premises without the
advance payment of VAT
except when the refined
sugar is owned and
withdrawn by a cooperative.
The advance VAT shall be
determined based on
schedules provided by the
BIR.  5) Short Period Return A final
(b) Sales of flour a) VAT on
the sale of flour milled from
imported wheat shall be paid
prior to the release from the
Bureau of Customs’ custody
of the wheat which Is
imported and declared for
flour milling; and b)
Purchases by flour millers of
imported wheat from traders
shall also be subjected to
advance VAT, and shall be
paid by the flour miller prior
to delivery
(c) Transport of naturally
grown and planted timber
products –  Thus,
Owners/sellers of naturally
grown and planted timber
products, whether natural or
juridical, who are holders of
permits issued by, or
agreements entered into
with, the Department of the
Environment and Natural
Resources (“DENR”), are
liable to pay the advance
VAT on naturally grown and
planted timber products
harvested prior to its
transport for purposes of
consummating a sale. 
An owner of naturally grown
and planted timber products,
who can present a Certificate
of Registration (BIR Form
No.2303) showing that the
owner is subject only to the
shall be exempt from the
payment of advance VAT.
However, if the aggregate
value of the products to be
transported exceeds
₱3,000,000, the same shall
be subject to advance VAT.
(d) Sale of jewelry, gold, and
other metallic minerals to (1)
Non-resident individuals not
engaged in business and (2)
Non-resident foreign
corporations 
quarterly VAT return shall be filed
by: 
a) Any person who retires
from business with due
notice to the BIR office
where the taxpayer’s head
office is registered or 
b) Any person whose VAT
registration has been
cancelled, 
Within 25 days from the end
of the month when the
business ceases to operate
or when the VAT registration
has been officially cancelled.
if a taxpayer’s
Certificate of Registration is
cancelled on November 20,
2015, he shall file his final
quarterly VAT return and pay
the tax on or before
December 25,2015.
However, subsequent
monthly
declaration/quarterly returns
are still required to be filed if
the results of the winding up
of the affairs or business of
the taxpayers reveal taxable
transactions
Where to File and Pay 
Only one (1) consolidated quarterly VAT
return or monthly VAT declaration covering
the results of operations of the head office
as well as the branches for all lines of
business subject to VAT shall be filed by the
taxpayer, for every return period, with the
BIR office where said taxpayer is required to
be registered.  LTAD having jurisdiction over the taxpayer,
a) Where payment is involved: The monthly
VAT declaration and quarterly return shall
be filed with, and the VAT due thereon paid
to:  Large Taxpayers Service (“LTS”), and those
(1) an authorized agent bank
(“ABB”) under the jurisdiction of the
Revenue District/BIR Office where
the taxpayer (head office of the
business establishment) is required
to be registered; or 
(2) in cases where there are no duly
accredited agent banks within the
municipality or city, the monthly
VAT declaration and quarterly VAT
return, shall be filed with and any
amount due shall be paid to the
RDO, Collection Agent, or duly
authorized Treasurer of the
Municipality/City where such
taxpayer (head office of the business
establishment) is required to be
registered.
b) Where no payment is involved:
The quarterly VAT return and the
monthly VAT declaration shall be
filed with the RDO/Large Taxpayers
District Office (“LTDO”),Large
Taxpayers Assistance Division
(“LTAD”), Collection Agent, duly
authorized Municipality/City
Treasurer of the municipality or city
where the taxpayer (head office of
the business establishment) is
registered or require to be
registered.  part/s thereof inconsistent with the provisions of
c) Taxpayer filing via the EFPS shall
comply with the provisions of the
EFPS Regulations.  after fifteen (15) days following its publication in
Quarterly Summary Lists 
All persons liable for VAT are required to
submit a quarterly Summary of Sales, and a
quarterly Summary List of Purchases. The
lists shall be recor
When and Where to File the Summary Lists
The quarterly summary list of sales or
purchases, whichever is applicable, shall be
submitted through compact disc-recordable
(“CDR”) medium to the RDO or LTDO or
on or before the 25th day of the month
following the close of the taxable quarter
(calendar or fiscal quarter). However,
taxpayers under the jurisdiction of the
enrolled under the EFPS shall, through the
electronic filing facility, submit their
summary lists of sales/purchases to the
RDO/LTDO/LTAD, on or before the 30th day
of the month following the close of the
taxable quarter.
Presidential Decree No. 692, without the need of
new appointments. 
All graduates with a Bachelors Degree, major in
Accounting shall be allowed to take the CPA
Licensure Examination within two (2) years from
the effectivity of this Act under the rules and
regulations to be promulgated by the Board
subject to the approval by the Commission. 
SEC. 42. Separability Clause. - If any clause,
provision, paragraph or part thereof shall be
declared unconstitutional or invalid, such
judgment shall not affect, invalidate or impair any
other part hereof, but shall be merely confined to
the clause, provision, paragraph or part directly
involved in the controversy in which such
judgment has been rendered. 
SEC. 43. Repealing Clause. - Presidential Decree
No. 692 is hereby repealed and all other laws,
orders, rules and regulations or resolutions or
this Act are hereby repealed or modified
accordingly. 
SEC. 44. Effectivity. - This Act shall take effect
the Official Gazette or in any major daily
newspaper of general circulation.