PRINCESS F.

MAGPATOC
LAW 310 (Taxation II)

VALUE ADDED TAX TABLE

Vatable Sale or Vatable Sale or Zero-Rated Zero-Rated Sale Transactions Change or Transactions
Exchange of Exchange of Sales of Goods of Services Deemed Sale Cessation of Exempt from
Goods or Services Status of VAT VAT
Properties Registered
Persons

1. Real 1. Construction (a) Export Sales 2. Services 1. Transfer, use Goods or 1. Sale or
properties held and service – the term other than or consumption properties importation of
primarily for salecontractors; means: processing, not in the course originally agricultural and
to customers or 2. Stock, real (1) Sale and manufacturing or of business intended for sale marine food
held estate, actual shipment re-packing of goods or or use in products
for lease in the commercial, of goods from rendered to a properties business, and in their original
ordinary course customs and the Philippines to person engaged originally capital goods state, livestock
of trade or immigration a in business intended for sale which are and poultry of a
business; brokers; foreign country, conducted or for existing during kind for
3. Lessors of irrespective of outside use in the course said occurrence human
2. The right or property, any shipping the Philippines of business is subject to consumption; and
the privilege to whether personal arrangement or to a non- 2. Distribution or output tax. breeding stock
use patent, or real; that may be resident person transfer to: and genetic
copyright, design 4. Persons agreed upon not engaged in a. Shareholders Change in status materials;
or engaged in which may business who is or investors as from VAT to Non- 2. Sale or
model, plan, warehousing influence or outside the share in the VAT importation of
secret formula or services; determine the Philippines when profits of the Except when fertilizers, seeds,
process, 5. Lessors or transfer of the services are VAT - registeredchange/cessation seedlings and
goodwill, distributors of ownership of the performed, the persons; or of business is fingerlings, fish,
trademark, cinematographic goods so consideration for b. Creditors in due to: prawn, livestock
trade brand or films; exported and which is paid for payment of debt.1. Change of and poultry feeds;
other like 6. Persons paid for in in control of a 3. Importation of
properties or engaged in acceptable acceptable 3. Consignment corporation by personal and
rights; milling, foreign currency foreign currency of goods if actual acquisition of the household effects
processing, or its and accounted sale is not made controlling belonging
3. The right or manufacturing or equivalent in for in within interest of such
the privilege to re-packing goods goods or accordance sixty (60) days corporation by to residents of the
use in the for others; services, and with the rules following the another Philippines
Philippines 7. Proprietors, accounted for in and regulations date said goods stockholder returning from
of any industrial, operators, or accordance with of the BSP; were (individual or abroad and non-
commercial or keepers of the rules and consigned; and corporate) or resident citizens
scientific hotels, motels, regulations of 3. Services 4. Retirement group of coming to re-settle
equipment; rest the Bangko rendered to from or stockholders. in the Philippines;
houses, pension Sentral ng persons or cessation of However, the
4. The right or houses, inns, Pilipinas (BSP); entities whose business and exchange of Provided, that
the privilege to resorts, theaters (5) The sale of exemption under change of goods or such goods are
use motion and movie goods, supplies, specials laws or business with properties exempt from
picture houses; equipment and international respect to all including the customs duties
films, films, 8. Proprietors or fuel to agreements to goods on hand, real estate under the Tariff
tapes and discs; operators of persons which the whether properties used and Customs
and restaurants, engaged in Philippines is capital goods, in business or Code of the
refreshment international a signatory stock-in-trade, held for sale or Philippines;
5. Radio, parlors, shipping or effectively supplies or for
television, cafes and other international air subjects the materials as lease by the 4. Importation of
satellite eating places, transport supply of such of the date of transferor, for professional
transmission and including clubs operations. services to zero such retirement shares of stocks, instruments and
cable and caterers; Provided, that rated (0%) rate; or cessation, whether resulting implements,
television time. 9. Dealers in the goods, 4. Services whether or in corporate wearing
securities; supplies, rendered to not the business control or not, isapparel, domestic
10. Lending equipment, and persons is continued by subject to VAT. animals and
investors; fuel shall be engaged in the new owner personal
11. used exclusively international or Change in status household effects
Transportation for international shipping or air successor. from VAT to Non- belonging to
contractors on shipping or air transport VAT a. persons coming
their transport of transport operations, to settle in the
goods or operations. including leases 2. Change in the Philippines; or
cargoes, (b) Exemptions of property for trade or b. Filipinos or their
including Under Special use thereof; corporate name families and
persons who Laws or Provided, that of the business; descendants who
transport goods International these services are now
or cargoes Agreement shall be 3. Merger or residents or
for hire and other Sales to persons exclusively for consolidation of citizens of other
domestic or entities or international corporations. The countries, such
common carriers entities whose shipping or air unused parties hereinafter
by land relative exemption under transport input tax of the referred to as
to their transport special laws or operations. dissolved overseas Filipinos,
of goods or international Thus, the corporation, as of 1) In quantities
cargoes. agreements to services referred the date of and of the class
12. Common which the to merger or suitable to the
carriers by air Philippines is a herein shall not consolidation, profession, rank
and sea relative signatory pertain to those shall be or position of the
to their transport effectively made to absorbed by the persons importing
of subjects such common carriers surviving or new said items;
passengers, sales to zero- by air and corporation. 2) For their own
goods or cargoes rate. sea relative to use;
from one place in their transport of 3) Not for barter or
the (2) Sale of raw passengers, sale; and
Philippines to materials or goods or 4) Accompanying
another place in packaging cargoes from such persons, or
the Philippines; materials to a one place in the arriving within a
13. Sales of non- Philippines to reasonable
electricity by resident buyer another place in Time
generation for delivery to a the Philippines,
companies, resident local the Bureau of
transmission export- same being Customs may
by any entity, oriented subject to twelve exempt such
and/or enterprise to be percent (12%) goods from
distribution used in VAT under Sec. payment of
companies, manufacturing, 108 of duties and taxes
including the NIRC; subject to:
electric processing, 1. The production
cooperatives; packing or re- 6. Transport of of satisfactory
14. Franchise packing in the passengers and evidence that such
grantees of Philippines of the cargo by persons are
electric utilities, said buyer’s domestic air or actually coming to
telephone and goods and paid sea settle in the
telegraph, radio for in acceptable vessels from the Philippines;
and/or television foreign Philippines to a and
broadcasting currency and foreign country. 2. That the goods
companies accounted for in Gross are brought from
whose annual accordance with receipts of their former place
gross receipt of the rules international air of
the preceding and regulations or shipping abode.
year exceeds of the BSP. carriers doing
Ten Million (3) Sale of raw business in the Vehicles, vessels,
Pesos materials or Philippines aircrafts,
(P10,000,000.00) packaging derived from machineries and
and franchise materials to transport of other similar
grantees of export-oriented passengers and goods
gas and water enterprise whose cargo from the for use in
utilities; export sales Philippines to manufacture, shall
15. Non-life exceed another not fall within this
insurance seventy percent country shall be classification and
companies (70%) of total exempt from shall therefore be
(except their crop annual VAT; however, subject to duties,
insurances), production. they are still taxes and other
including surety, liable to a charges;
fidelity, indemnity (4) Those percentage tax
and considered of three percent 5. Services
bonding export sales (3%) based on subject to
companies; and under E.O. 226, their gross Percentage Tax
16. Similar otherwise known receipts derived under Title V,
services as the Omnibus from transport of NIRC as
regardless of Investment Code cargo from the enumerated
whether or not of Philippines to below:
the 1987, and other another country a. Sale or lease of
performance special laws. as provided for goods or
thereof calls for in Sec. 118 of properties or the
the exercise or the Tax Code; performance of
use of the and services of non-
physical or VAT-registered
mental faculties. 7. Sale of power persons, the gross
a. The lease or or fuel generated annual sales
the use of, or the through and/or receipts of
right or privilege renewable which does not
to sources of exceed the
use any energy such as, amount of Three
copyright, patent, but not limited to, Million
design or model, biomass, Pesos
plan, solar, wind, (P3,000,000.00)
secret formula or hydropower, (Sec.116 of the
process, geothermal and NIRC);
goodwill, steam, ocean b. Services
trademark, energy, and rendered by
trade brand or other emerging domestic common
other like sources using carriers by
property or right; technologies land, for the
b. The lease or such as fuel cells transport of
the use of, or the and hydrogen passengers and
right to use of fuels; Provided, keepers of
any however, that garages (Sec.
industrial, zero-rating shall 117);
commercial or apply strictly to
scientific the sale c. Services
equipment; of power or fuel rendered by
c. The supply of generated international
scientific, through air/shipping
technical, renewable carriers (Sec.
industrial or sources 118);
commercial of energy, and d. Services
knowledge or shall not extend rendered by
information; to the sale of franchise grantees
d. The supply of services of radio
any assistance related to the and/or television
that is ancillary maintenance or broadcasting
and operation of whose annual
subsidiary to and plants gross
is furnished as a generating said receipts of the
means of power. preceding year do
enabling not exceed Ten
the application or 1. Processing, Million Pesos
enjoyment of any manufacturing or (P10,000,000.00),
such property, or re-packing and by franchise
right as is goods for other grantees of gas
mentioned in persons doing and water utilities
subparagraph (b) business outside (Sec. 119);
hereof, or the Philippines, e. Service
any such which goods are rendered for
knowledge or subsequently overseas dispatch,
information as is exported, where message or
mentioned the services are conversation
in subparagraph paid for in originating from
(c) hereof; acceptable the Philippines
e. The supply of foreign currency (Sec.
services by a and accounted 120) ;
non-resident for in
person or accordance f. Services
his employee in with the rules rendered by any
connection with and regulations person, company
the use of of the BSP. or
property corporation
or rights 5. Services (except purely
belonging to, or performed by cooperative
the installation or subcontractors companies or
operation and/or associations)
of any brand, contractors in doing life
machinery, or processing, insurance
other apparatus converting, or business of any
purchased from manufacturing sort in
such non- goods for an the Philippines
resident person; enterprise whose (Sec. 123);
f. The supply of export sales g. Services
technical advice, exceed seventy rendered by fire,
assistance or percent (70%) of marine or
services total miscellaneous
rendered in annual insurance agents
connection with production. of foreign
technical insurance
management or companies (Sec.
administration of 124);
any scientific, h. Services of
industrial or proprietors,
commercial lessees or
undertaking, operators of
venture, cockpits,
project or cabarets, night or
scheme; day clubs, boxing
g. The lease of exhibitions,
motion picture professional
films, films, tapes basketball games,
and Jai-Alai and race
discs; and tracks
h. The lease or (Sec. 125); and
the use of or the i. Receipts on
right to use radio, sale, barter or
television, exchange of
satellite shares
transmission and of stock listed and
cable traded through the
television time. local
stock exchange or
through initial
public
offering (Sec.
127).

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;

8. Educational
services by private
institutions, duly
accredited by the
Department of
Education
(DepEd) and the
Commission on
Higher
Education (CHED)
and 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;
10. Services
rendered by
Regional or Area
Headquarter
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;

11. Transactions
which are exempt
under
International
Agreements to
which the
Philippines is a
signatory or under
special laws;
12. Sales by
agricultural
cooperatives duly
registered and in
good
standing with the
Cooperative
Development
Authority (CDA) to
their
members;
13. Gross receipts
from lending
activities by credit
or multi-purpose
cooperative duly
registered and in
good standing
with the CDA;
14. Sale by non-
agricultural, non-
electric and non-
credit
cooperatives:
provided that the
share capital
contribution of
each
member does not
exceed Fifteen
Thousand Pesos
(P15,000) and
regardless of the
aggregate capital
and net surplus
ratable
distributed among
the members;
15. Export sales
by a non-VAT
registered person;
16. The following
sales of real
properties are
exempt from VAT:
a. Sale of real
properties not
primarily held for
sale or lease in
the ordinary
course of trade or
business.
However, even if
the real property is
not primarily held
for sale to
customers or held
for lease in the
ordinary course of
trade or business
but
the same is used
in the trade or
business of the
seller, the sale
shall
therefore be
subject to VAT
being a
transaction
incidental to the
taxpayer’s main
business (RR 4-
2007).
b. Sale of real
properties utilized
for low-cost
housing wherein
the price
ceiling per unit is
P750,000.00 as
set by the Housing
and Urban
Development
Coordinating
Council (HUDCC)
and other laws.
c. Sale of house
and lot utilized for
socialized housing
wherein the price
ceiling per unit is
P450,000.00 or as
may from time to
time be
determined by the
HUDCC and the
NEDA and other
related laws.

d. Sale of
residential lot
valued at One
Million Five
Hundred
Thousand
Pesos
(P1,500,000.00)
and below, or
house & lot and
other residential
dwellings valued
at Two Million Five
Hundred
Thousand Pesos
(P2,500,000.00)
and below, as
adjusted in 2011
using the 2010
Consumer Price
Index values
(increased to
P3,199,200.00 as
a result of
the adjustment
made in 2011
using the
Consumer Price
Index Values
per RR No. 16-
2011 and made
effective January
1, 2012, per RR
No. 3-
2012)

Beginning January
1, 2021, the VAT
exemption shall
only apply to:
✓ Sale of real
properties not
primarily held for
sale to customers
or
held for lease in
the ordinary
course of trade or
business
✓ Sale of real
property utilized
for socialized
housing as
defined by
Republic Act No.
7279,
✓ Sale of house
and lot, and other
residential
dwellings with
selling
price of not more
than Two Million
Pesos
(P2,000,000.00),
subject to
adjustment to its
present value
using the
Consumer Price
Index
(increased to
P3,199,200.00 as
a result of the
adjustment made
in
2011 using the
Consumer Price
Index Values and
to correct the
provision in RR
No. 4-2021, the
previous threshold
was reiterated in
RR No. 8-2021).
Note: Per RR No.
4-2021, as
amended by RR
No. 8-2021

17. Lease of
residential unit
with a monthly
rental per unit not
exceeding
P15,000.00;
18. Sale,
importation,
printing or
publication of
books and
any newspaper,
magazine, review,
or bulletin, or any
such educational
reading material
covered by the
UNESCO
Agreement on
importation of
educational,
scientific and
cultural materials
(including
digital/electronic
format) not
devoted principally
to
the publication of
paid
advertisements
and that
materials
enumerated are
compliant with the
requirements set
fort by the
National Book
Development
Board (as
amended by RR
No. 4-2021);

18. Transport of
passengers by
international
carriers;
19. Sale,
importation or
lease of
passenger or
cargo
vessels and
aircraft, including
engine, equipment
and
spare parts for
domestic and
international
transport
operations;
20. 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 for
international
shipping or air
transport
operations;

21. Services of
banks, non-bank
financial
intermediaries
performing quasi-
banking functions,
and other non-
bank
financial
intermediaries
subject to
percentage tax
under
Sections 121 and
122 of the NIRC,
such as money
changers
and pawnshops;
22. 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;

24. Transfer of
Property pursuant
to Section
40(C)(2) of the
Tax
Code, as
amended;
25. Association
dues, membership
fees, and other
assessments
and charges
collected on a
purely
reimbursement
basis by
homeowners’
associations and
condominium
corporations
established under
Republic Act No.
9904 (Magna
Carta for
Homeowners and
Homeowners’
Association) and
Republic Act
No. 4726 (The
Condominium
Act), respectively;
26. Sale of gold to
the Bangko
Sentral ng
Pilipinas;

27. Sale or
importation of
prescription drugs
and medicines for:
a. Diabetes, high
cholesterol, and
hypertension
beginning
January 1, 2020;
and
b. Cancer, mental
illness,
tuberculosis, and
kidney diseases
beginning January
1, 2021 (as
amended by RR
No. 4-2021,
where the original
date of 2023 was
changed to 2021).
The exemption
from VAT shall
only apply to sale
or importation of
the manufacturers,
distributors,
wholesalers and
retailer of drugs
and medicines
included in the list
of approved drugs
and
medicines issued
by the Department
of Health (DOH).

27. Sale or
importation of the
following
beginning January
1, 2021 to
December 31,
2023 (this was
included as an
exemption per RR
No. 4-
2021):
a. Capital
equipment, its
spare parts and
raw materials,
necessary for
the production of
personal
protective
equipment (PPE)
components
such as coveralls,
gown, surgical
cap, surgical
mask, n-95 mask,
scrub suits,
googles and face
shield, double or
surgical gloves,
dedicated shoes
and shoes covers,
for COVID-19
prevention;
b. All drugs,
vaccines and
medical devices
specifically
prescribed and
directly used for
the treatment of
COVID-19 and;
c. Drugs for the
treatment of
COVID-19
approved by the
FDA for use in
clinical trials,
including raw
materials directly
necessary for the
production of such
drugs

Requirements:
1. DTI shall certify
that such
equipment, spare
parts or raw
materials for
importation are not
locally available or
insufficient in
quantity, or not in
accordance with
the quality or
specification
required
2. For item (b)
within sixty days
from effectivity of
the CREATE
and every three
months thereafter,
DOH shall issue a
list of
prescription drugs
and medical
devices covered
by this
provision (list
covered under this
provision was
released in RMC
No. 81-2021).
Requirements:
1. For item (a) and
(c), the supplier/s
or importer shall
submit for
the purpose of
availing exemption
the following:
i. Certified true
copy of License to
Operate issued to
the
manufacturer-
buyer by the DOH-
FDA authorizing
the
manufacture of
medical grade
PPE components
and drugs for the
treatment of
COVID-19
ii. Sworn
Declaration from
the manufacturer-
buyer that the
items
shall be used for
the manufacture of
the PPE
components and
drugs for the
treatment of
COVID-19
Exemption shall
be subject to post
audit by the BIR or
BOC

28. 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
(P3,000,000.00)
(as amended
by RR No. 4-
2021).
Gross annual
sales shall
comprise of the
business’ total
revenues from
sales
of its products,
which are either
goods or services,
including non-
refundable
advance
deposits/payments
for services, net of
discounts, sales
returns and
allowances,
covering the
calendar or fiscal
year.
Sales incidental to
the registered
operations of the
business shall
also be
included.

Note:

- Cooperatives
and;

- Self-employed
individuals and
professionals
availing of the

8% tax on gross
sales and/or
receipts and other
non-
operating income,
under Sections
24(A)(2)(b) and

24(A)(2)(c)(2)(a)
of this Code shall
also be exempt
from the
payment of twelve
percent (12%)
VAT and three
percent (3%)
percentage tax.