The VAT shall apply to goods or properties originally intended for sale or use in business and capital goods

which are existing as of the occurrence of

the following
1. Change of business activity from VAT taxable status to VAT-exempt status
2. Approval of a request for cancellation of registration due to reversion to exempt status
3. Approval of request for cancellation of registration due to a desire to revert to exempt of status after the lapse of three (3) consecutive
years from the time of registration by a person who voluntarily registered despite being exempt
4. Approval of a request for cancellation of registration of one who commenced business with the expectation of gross sales or receipts
exceeding Php 3 Million, but who failed to exceed this amount during the first twelve months of operation.
5. The exchange of goods or properties including the real estate properties used in business or held for sale or for lease by the transferor, for
shares of stocks, whether resulting in corporate control or not, is subject to VAT

a. Not subject to output tax

The VAT shall not apply to goods or properties which are originally intended for sale or use in the course of business existing as of the occurrence of
the following:
1. Change of control of a corporation by acquisition of the controlling interest of such corporation by another stockholder (individual or
corporate) or group of stockholders.
2. Change in the trade or corporate name of the business
3. Merger or consolidation of corporations. The unused input tax of the dissolved corporation, as of the date of merger or consolidation,
shall be absorbed by the surviving new corporation.

Cancellation of VAT Registration

A VAT-registered taxpayer may cancel his registration for VAT if:
 Gross sales or receipts do not exceed Php 3 Million
 Cessation or termination of business
 Change of ownership, in the case of single proprietorship
 Dissolution of partnership or corporation
 Merger or consolidation with respect to the dissolved corporation/s
 A person who has registered prior to planned business commencement, but failed to actually start his business

Transition from VAT to Non-VAT