VAT-EXEMPT SALES

Who FETCH ReAL Gold Free

 WHO?
1. Services rendered by individuals pursuant to an employer-
employee relationship;
2. 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;
3. Export sales by persons who are not VAT-registered;
 WHO?
4. Subject to percentage tax:
• Services subject to percentage tax under Title V of the Tax Code, as amended;
• 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).

5. 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;
6. 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;
 FOOD
• 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;
• 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);
• Services by agricultural contract growers and milling for others of palay into
rice, corn into grits, and sugar cane into raw sugar;
 EDUCATION
• 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;
• 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;
 TRANSPORTATION
• Sale, importation or lease of passenger or cargo vessels and aircraft,
including engine equipment and spare parts thereof for domestic or
international transport operations; 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);
• Transport of passengers by international carriers;
 COOPERATIVES
• 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;
• Gross receipts from lending activities by credit or multi-purpose cooperatives duly
registered and in good standing with the Cooperative Development Authority;
• 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;
 HEALTH
• Medical, dental, hospital and veterinary services except those rendered by
professionals;
• Sale or importation of prescription drugs and medicines for:
• diabetes, high cholesterol, and hypertension (beginning on January 1, 2020)
• cancer, mental illness, tuberculosis, and kidney diseases (beginning January 1,
2021)
The exemption from VAT shall only apply to the sale or importation by the
manufacturers, distributors, wholesalers and retailers of drugs and medicines included
in the “list of approved drugs and medicines” issued by the Department of Health (DOH)
 HEALTH
• Sale or importation of the following beginning January 1, 2021 to December 31,
2023:
i. Capital equipment, its spare parts and raw materials, necessary for the production of
personal protective equipment (PPE) components such as coveralls, gowns, surgical
cap, surgical mask, n-95 mask, scrub suits, goggles and face shield, double or
surgical gloves, dedicated shoes, and shoe covers, for COVID-19 prevention.
ii. All drugs, vaccines and medical devices specifically prescribed and directly used
for the treatment of COVID-19; and
iii. Drugs for the treatment of COVID-19 approved by the Food and Drug Administration
(FDA) for use in clinical trials, including raw materials directly necessary for the
production of such drugs.
 REAL PROPERTY : SALE
• The following sales of real properties:
i. Sale of real properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business.
ii. 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;
iii. Sale of real properties utilized for socialized 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;
iv. 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.
 REAL PROPERTY : SALE
NOTE: 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.
 REAL PROPERTY : SALE (BEGINNING
JANUARY 1, 2021)
i. Sale of real properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business.
ii. 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;
iii. Sale of real properties utilized for socialized housing as defined under RA No. 7279.
iv. Sale of house and lot and other residential dwellings with selling price of not more than
P2,000,000, as adjusted using latest Consumer Price Index values.
 REAL PROPERTY : SALE (BEGINNING
JANUARY 1, 2021)
RR No. 8-2021: AMENDMENTS
Prior to January 1, 2021, the VAT exempt threshold for sale of house and lot and other residential
dwelling was P3,199,200. This was the result of the adjustment made in 2011 using the 2010
Consumer Price Index pursuant to RR No. 16-2011 dated October 27, 2011, and this became
effective January 1, 2012 per RR No. 3-2012 dated February 20, 2012. The VAT-exempt threshold of
P3,199,200 was applied and enjoyed by the taxpaying-public from January 1, 2012 up to December
31, 2020, or for eight (8) long years. As such, fairness and equity dictate that the VAT-exempt
threshold under RA No. 10963 (TRAIN Law), of P2,000,000 for sale of house and lot and other
residential dwellings should also be adjusted to P3,199,200 beginning January 1, 2021.
 REAL PROPERTY : SALE (BEGINNING
JANUARY 1, 2024)
RR No. 1-2024: AMENDMENTS
Sale of house and lot and other residential dwellings with selling price of not more than P3,199,200,
as adjusted to P3,600,000 using the 2023 Consumer Price Index values to take effect
beginning January 1, 2024.
 ASSOCIATION DUES
• 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;
 LEASE OF RESIDENTIAL UNIT
• Monthly rental per unit not exceeding Fifteen
Thousand Pesos (P15,000.00)
 CASE 1:

• Lease of commercial units in Makati for

15,000 per unit per month. The aggregate
gross receipts during the year was
2.200,000. The developer is a vat
registered entity.
 CASE 2:

• Lease of residential units in Makati for

15,000 per unit per month. The aggregate
gross receipts of the lessor during the
year was 5,000,000.
 CASE 3:

• Lease of residential units in Makati for

20,000 per unit per month. The aggregate
gross receipts of the lessor during the
year was 5,000,000.
 CASE 4:

• Lease of several residential units in

Makati:
Monthly Rent Annual Gross Receipts
P12,000 P3,200,000
P16,000 P3,800,000
SALE OF GOLD TO BSP
 TAX-FREE EXCHANGES
• Transfer of property in merger or consolidation (pursuant to Section
40(C)(2) of the Tax Code, as amended);
- Merger and consolidation
- Property is transferred to a corporation by a person or together with
others (not exceeding 4 persons), in exchange for stock or unit of
participation in such a corporation of which as a result of such
exchange gains or maintains control of the said corporation.