VALUE-ADDED TAX
exchanged, or deemed sold in the Philippines.
VAT is a tax on consumption levied on the sale, barter,
exchange or lease of goods or properties and services in
the Ph.
SELLER is the one statutorily liable for the payment of the
tax but the amount of the tax may be shifted or passed on
to the buyer, transferee or lessee of the goods, properties
or services.
In the case of importations, the importer is liable for the
VAT.
Sale, transfer or exchange of imported goods by tax-
exempt persons.
In the case of goods imported into the Philippines by VAT-
exempt persons, entities or agencies which are
subsequently sold, transferred or exchanged in the
Philippin to son-exempt persons or entities, the latter shall
be considered the importers thereof and shall be liable for
VAT due on such importation. The tax due on such
importation shall constitute a lien on the goods, superior to
all charges/or liens, irrespective of the possessor of said
goods.
Section 236 of the NIRC:
(G) Persons Required to Register for Value-Added Tax.
Any person who, in the course of trade or business, sells,
barters or exchanges goods or properties, or engages in
the sale or exchange of services, shall be liable to register
for value-added tax if:
His gross sales or receipts for the past twelve (12)
months, other than those that are exempt under Section
109(A) to (BB), have exceeded Three million pesos
(P3,000,000); or
(H) Optional Registration for Value-Added Tax of
Exempt Person.
Any person may elect to register for value-added tax by
registering with the Revenue District Office that has a
jurisdiction over the head office of that person, and paying
the annual registration fee.
Any person who elects to register under this Subsection
shall not be entitled to cancel his registration under
Subsection (F)(2) for the next three (3) years.
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VATABLE TRANSACTIONS:
1. Sale of Good or Properties
2. Sale or Exchange of Services
3. Lease of Properties
4. Transactions Deemed Sale
5. Importations
VAT ON SALE OF GOODS OR PROPERTIES.
VAT is imposed and collected on every sale, barter or
exchange, or transactions "deemed sale" of taxable goods
or properties at the rate of twelve percent (12%) (starting
February 1, 2006) of the gross selling price or gross value
in money of the goods or properties sold, bartered, or
VATABLE TRANSACTIONS:
VAT on the Sale of Services and Use or Lease of
Properties.
Sale or exchange of services, as well as the use or lease
of properties, as defined in Sec. 108 (A) of the Tax Code
shall be subject to VAT, equivalent to twelve percent (12%)
(starting February 1, 2006) of the gross receipts.
GROSS SELLING PRICE:
The term "gross selling price" means the total amount of
money or its equivalent which the purchaser pays or is
obligated to pay to the seller in consideration of the sale,
barter or exchange of the goods or properties, excluding
VAT.
The excise tax, if any, on such goods or properties shall
form part of the gross selling price.
VATABLE TRANSACTIONS:
VAT on Importations. There shall be levied, assessed and
collected on every importation of goods a value-added tax
equivalent to twelve percent (12%) based on the total
value used by the Bureau of Customs in determining tariff
and customs duties plus customs duties, excise taxes, if
any, and other charges, such tax to be paid by the
importer prior to the release of such goods from customs
custody: Provided, That where the customs duties are
determined on the basis of the quantity or volume of the
goods, the value-added tax shall be based on the landed
cost plus excise taxes, if any.
ZERO-RATED
1. Export of Goods
2. Export of Services
3. Covered by special laws or international agreements
4. Services to international shipping or air transport
operations, including leases of property for use
5. Services to export-oriented (70%)
6. Transport of passengers and cargo by domestic air or
sea carriers from the Philippines to a foreign country
7. Sale of power or fuel generated through renewable
sources of energy
EXEMPT TRANSACTIONS:
1. Sale or importation of agricultural and marine food
products in their original state, livestock and poultry if or
kind generally used as, or yielding or producing foods for
human consumption; and breeding stock and genetic
materials therefor.
2. Sale or importation of fertilizers; seeds, seedlings and
fingerlings; fish, prawn, livestock and poultry feeds,
3. Importation of professional instruments and implements,
tools of trade, occupation or employment,
4. Transactions which are exempt under international
agreements to which the Philippines is a signatory or
under special laws, except those under Presidential
Decree No. 529;
6. Gross receipts from lending activities by credit or multi-
purpose cooperatives duly registered with the Cooperative
Development Authority;
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SALES TO GOVERNMENT:
All the input taxes that can be directly attributed to
transactions subject to VAT may be recognized for input
tax credit;
INVOICING REQUIREMENTS:
What is the invoicing/receipt requirement of a VAT-
registered person?
A VAT registered person shall issue:
(1) A VAT invoice for every sale, barter or exchange of
goods or properties; and
(2) A VAT official receipt for every lease of goods or
properties and for every sale, barter or exchange of
services.
VALUE-ADDED TAX:
What is the rule on claims for input tax on purchases of
depreciable capital goods (local/imported) if purchase
amount exceeds PIM?
If aggregate acquisition cost of all depreciable goods
acquired in a month exceeded PIM, the claims for input
tax shall be spread over the life of the depreciable goods
or sixty (60) months, whichever is shorter.
CLAIMS FOR INPUT TAX ON DEPRECIABLE GOODS
The amortization of the input VAT shall only be allowed
until December 31, 2021 after which taxpayers with
unutilized input VAT on capital goods purchased or
imported shall be allowed to apply the same as scheduled
until fully utilized.
VALUE-ADDED TAX:
REVENUE REGULATIONS NO. 16-2005
SECTION 4.112-1. Claims for Refund/Tax
Certificate of Input Tax.
Where the taxpayer is engaged in both zero-rated or
effectively zero-rated sales and in taxable and the amount
of creditable input tax cannot be directly and entirely
attributed to any one of the transactions, only the
proportionate share of input taxes allocated to zero-rated
or effectively zero-rated sales can be claimed for refund or
issuance of a tax credit certificate.
EXCESS INPUT TAX:
In the latter scenario where the taxpayer engages in both
VATable and zero-rated activities but the input VAT cannot
be directly attributable to such zero-rated activities, the
taxpayer may only file a claim for refund or issuance of
TCC if it has excess and unutilized input VAT, że., its input
VAT is greater than its output VAT. Necessarily, if the
taxpayer has a VAT payable, it cannot be entitled to a
refund or issuance of TCC even if the input VAT being
claimed for refund or issuance of TCC is from zero-rated
activities. Any input VAT from both VATable and zero-rated
activities must be offset against any output VAT before it
can be said that an excess input VAT exists.
FINAL TO CREDITABLE VAT:
RA No. 10963 (RR No. 18-2018)
Withholding of VAT on Government Money Payments and
Payments to Non- Residents
Withholding of Value-added Tax. The Government or any
of its political subdivisions, instrumentalities or agencies,
including government-owned or -controlled corporations
(GOCCs) shall, before making payment on account of
each purchase of goods and services which are subject to
the value-added tax imposed in Sections 106 and 108 of
this Code, deduct and withhold the value- added tax
imposed in Sections 106 and 108 of this Code, deduct and
withhold a final value-added tax at the rate of five percent
(5%) of the gross payment thereof:
FINAL TO CREDITABLE VAT:
RA No. 10963 (RR No. 18-2018)
Withholding of VAT on Government Money Payments and
Payments to Non-Residents
Provided, that beginning January 1, 2021, the VAT
withholding system under this subsection shall shift from
final to a creditable system.
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DEADLINE FOR FILING VAT RETURNS:
BIR Form 2550M 20th day following the close of the
month
BIR Form 2550Q- 25th day following the close of the
quarter
SALE OF GOODS OR PROPERTIES
• Vat is based on the sales price
• Tax rate is 12% and 0% (0-rated) and exempl
The tax formula
• Output taxes less input taxes = Vat payable (due)
• Output tax is selling price x 12% or 0%
Input taxes are Vat paid on the purchase or importation of
goods, services, supplies, capital goods
Credit
Vat on sales to government
• Final value added tax is 5% on payment to be made
Vat on acquisition of capital goods
• The input VAT is deductible from the output VAT in full
regardless of the amount
• The excess of input VAT can be used as creditable in the
next VAT reporting period
Sales invoice and accounting records
a. A Vat registered person shall issue:
b. A Vat invoice for every sale, barter, or exchange of
goods or properties
c. A vat official receipt for every lease of goods or
properties and for every lease of goods or properties and
for every sale, barter or exchange of services
Vat declarations and return
  THE SUBMISSION OF THE SUMMARY LISTS
Returns should be prepared quarterly thru 2550Q OF SALES AND PURCHASES IS ON THE 25
OF THE MONΤΗ
Payments should be paid every 20th of the ensuing 1st
quarter month VAT PAYMENT

The corresponding Summary List of Sales and Purchases
should be submitted on the 25th of the ensuing 1 quarter
month (SSLP)
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Filing of returns
The quarter vat declarations (BIR form 2550Q) shall be
filed and the vat paid not later than 20th day of the next
month
The corresponding attachments should be submitted not
later than the 25th of next month following the quarter
WHETHER YOU ARE ENGAGE IN BUSINESS OR NOT
YOU HAVE TO PAY THE VAT.
1. IF VAT REGISTERED CLAIM VAT AS INPUT TAX
2. IF NON-VAT, VAT PAID IS AN EXPENSE
3. IF NOT ENGAGE IN BUSINESS, VAT IS YOUR
EXPENSE
VAT REGISTRATION
ANY PERSON WHO IN THE COURSE OF TRADE OR
BUSINESS SELLS, BARTERS EXCHANGES GOODS
OR PROPERTIES OR ENGAGES IN SERVICES IS
SUBJECT TO VAT EXCEPT THOSE MANDATED AS
NON-VAT TAXPAYERS OR THOSE WHO ELECT TO BE
VAT REGISTERED

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Taxable quarter - refers to the quarter that is synchronized BASIC REGISTRATION INFO
with the income tax quarter
WHEN: BEFORE THE START OF THE BUSINESS
Payments in the monthly vat declarations shall be credited
in the quarterly vat return to arrive at the net vat payable WHERE: WITH THE REO WHERE THE PLACE OF
or excess input tax BUSINESS IS LOCATED

PRESENTATION OUTLINE WHAT TO PAY: ANNUAL REGISTRATION FEE OF

Php500 THRU BIR FORM 0605 FOR EVERY SEPARATE
 Registration OR DISTINCT ESTABLISHMENT OR PLACE OF
 Invoicing BUSINESS ON OR BEFORE JAN 30
 Bookkeeping Requirements
 Filing of Returns and Payment of Vat
 Summary List of Sales and Purchases
 Refunds and Tax Credit Certificates
VAT MANDATORY REG'N
TO REGISTER AS VAT OR NON-VAT
1. THE GROSS SALES FOR THE PAST 12 MONTHS
YOU HAVE YOUR OPTION IF YOUR SALE OF GOODS EXCEEDED THE Php 3million THRESHHOLD
OR SERVICES DOMESTICALLY DOES NOT EXCEED
THE THRESHOLD 2. THERE ARE REASONABLE GROUNDS TO BELIEVE
THAT THE GROSS SALES OR RECEIPTS WILL FOR
TO REGISTER AS VAT OR NON- VAT THE NEXT 12 MONTHS
VAT THRESHOLD IS Php 3 million
However If you decide to be a Non-Vat CANCELLATION OF REG'N
A VAT-REGISTERED PERSON MAY CANCEL HIS
TO REGISTER AS VAT OR NON- VAT REGISTRATION IF,

 Tax compliance is simpler 1. He makes written application and can demonstrate to

BIR satisfaction that his gross sales or receipts for the
 File Form 25510
following 12 months will not exceed the vat threshold
 Pay Percentage Tax based on your Gross Sales
2. He has ceased to carry on his trade or business within
VAT REGISTRATION
the next 12 months
IF YOU HAVE NO OPTION BUT TO REGISTER AS VAT
CANCELLATION OF REG'N
COMPANY
1. Change of ownership in case of a single proprietorship
 FILE FORM 2550M OR 25500
 FILE THE SUMMARY LIST OF SALES AND 2. Dissolution of a partnership or corporation
PURCHASES (SLSPI
3 merger or consolidation with respect to dissolved
VAT REGISTRATION corporation
 VAT IS WITHHELD BY THE PAYOR EXCEPT 4. A person who has registered but failed to actually start
IN CASES OF ZERO RATED SALES the business
 VAT IS REMITTED TO THE BIR ON THE 20TH
OF THE MONTH 5. A person has retired from business

REGISTRATION UPDATE
WHEN BIR UPDATE FORM 1905 IS NEEDED:
1. A persons business has become exempt
2. A change in the nature of business from vat to vat-
exempt
3. A person who is vat exempt but voluntarily registered as
vatable but after the lapse of 3 years applies for
cancellation
4. When sales of a vat registered company for 3
consecutive years did not meet the threshold requirement
COMPLIANCE ACTIVITIES AFTER REG'N
TAXPAYERS
1. Pay annual registration fee of php500
2. Register books of accounts
3. Register invoices or official receipts
4. File monthly vat declaration and quarterly vat return
5. Submit quarterly summary list of sales and purchases
 The invoice and the official receipts are the
sources of vat inputs
VAT INVOICING
 12% VAT - the amount of the tax shall be shown
as a separate item in the invoice or official
receipt
 Zero-rated sales shall be printed prominently
ON THE INVOICE OR OFFICIAL RECEIPT
VAT INVOICING
VAT
The 12%, o-rated, and exempt sales the invoice/receipt
shall indicate the breakdown of the sale price between
taxable, exempt and zero-rated and the calculation of the
vat shall be shown it is recommended that when multiple
transaction occurs where vatable, exempt or zero rated a
separate invoice shall be issued on each transaction
PROPER ISSUANCE OF INVOICE
 All vat registered taxpayers should separately
bill the vat

COMPLIANCE ACTIVITIES AFTER REG'N NON-VAT
TAXPAYERS
1. Pay annual registration fee
2. Register books of accounts
3. Register non-vat invoices or offficial receipts
4. File monthly percentage tax return
REGISTRATION UPDATE
 A short period return for the remaining period
that he was vat registered shall be filed within
25 days from date of cancellation of registration
 For percentage tax the taxpayer shall file the
initial monthly return for the month following the
month of registration
 The amount of tax be shown as separate item in
the invoice/receipt
PENALTY FOR ERRONEOUS INVOICING
 Vat registered taxpayer without indicating "vat
exempt sale shall be subject to 12% vat
FILING OF RETURNS
1st month of the quarter- vat monthly declaration for the
transaction during the said month
2nd month of the quarter- vat monthly declaration for the
transactions during the said
3rd month of the quarter- vat quarterly return for the
transactions for the said month plus transactions for the
first and second month

VAT INVOICING FILING OF RETURNS

1 NAME, TIN, ADDRESS  The monthly vat declarations (BIR form 2550m)
2. DATE OF TRANSACTION shall be filed and the vat paid the 20th day the
3. NAME, TIN, BUSINESs ADDRESS OF VAT ensuing month
REGISTERED PURCHASERS
4. THE SELLING AMOUNT  The quarterly vat return shall be filed and the vat
5. THE VAT AMOUNT paid not later than the 25th the ensuing month
6. THE TOTAL INVOICE AMOUNT
SHORT PERIOD RETURN
VAT INVOICING WHEN REQUIRED?
WHAT TO USE FOR SALES OF (TANGIBLE) GOODS
 when retiring from business after due notice to
1. Sales invoice
revenue district office
2. When collecting collection receipt
 when vat registration has been cancelled
VAT INVOICING
WHEN SELLING SERVICES
SHORT PERIOD RETURN
WHEN TO FILE THE QUARTERLY RETURN?
1. Use billing invoice
2. When collecting use official receipt
 25 days after the end of month

VAT INVOICING  Subsequent monthly declarations and quarterly

 In actual practice returns should still be filed if winding up reveal
taxable transactions
 INFO IN THE SLP
SHORT PERIOD RETURN
NEW VAT TAXPAYER WHEN LIABLE? 1. BIR REGISTERED NAME OF BUYER
2. ADDRESS OF SELLER/SUPPLIER
 On effective date of registration (registration 3. TIN OF SELLER
date on the face of the cor) 4. EXEMPT PURCHASES
5. ZERO RATED PURCHASES
 Non-vat taxpayer is liable on the first day of the
month following the registration INFO IN THE SLI

1. IMPORT ENTRY
SHORT PERIOD RETURN 2. ASSESSMENT/RELEASE DATE
WHEN REQUIRED TO FILE INITIAL DECLARATION AND 3. DATE OF IMPORTATION
RETURN? 4. NAME OF SELLER
5. COUNTRY OF ORIGIN
 Within 20 days after end of quarter 6. DUTIABLE VALUE
7. ALL CHARGES BEFORE RELEASE FROM CUSTOMS
 Initial quarterly return shall be filed on or before 8. LANDED COST
the 25th after end of the taxable quarter 9. VAT PAID
10. OR EVIDENCING TAX PAYMENT:
SHORT PERIOD RETURN 11. DATE OF VAT PAYMENT

 If the effective date of registration falls on the

3rd month, the returns should be filed on the
25th following the end of the taxable quarter. No
monthly vat return need be filed
WHERE TO FILE AND PAY
1. Authorized bank under the jurisdiction of rdo where the
company is registered
2. Where no accredited agent bank, payment can be done
to the
QUARTER SLS AND SLP
RULES FOR SLS AND SLP
1. Vatable sales, exempt and zero rated
2. Vatable purchases, exempt and zero rated
3. Arrange names of sellers alphabetically
4 BIR registered name, tin and period covered
QUARTERLY SLS AND SLP
HOW SUBMITTED?
 BY EMAIL
 TO THE RDO HAVING JURISDICTION
 BEFORE THE DUE DATES DESIGNATED

a) RDO VAT ON SALE OF SERVICES

b) COLLECTION AGENT
c) TREASURER OF THE MUNICIPALITY • The vat on sale of services is based on gross receipts

• Gross receipts means the total amount of money or its

ONE VAT RETURN
 One consolidated quarterly vat return or monthly
vat declaration covering the head office and the
branches
equivalent representing the contract price, compensation,
service fee, rental or royalty including the amount charged
for materials supplied with the services and deposits
• The tax is 12% or zero%

• In cases of sales to the government a final Vat of 5% is

SLS, SLP, SLI withheld

SLS: SUMMARY LIST OF SALES VAT TAX FORMULA

SLP: SUMMARY LIST OF PURCHASES
SLI: SUMMARY LIST OF IMPORTATION Output taxes
Less: Input taxes
ALL PERSONS LIABLE FOR VAT ARE REQUIRED TO Equals: Vat tax payable
SUBMIT THE SLS, SLP, SLI
INPUT TAXES
Input taxes are vat paid on:
SLS AND SLP 1. Purchase of:
a. Materials used in sale of services
SUBMISSION: thru the company email if possible b. Supplies used in the sales of services
dedicated for such C. Services
d. Capital goods subject to depreciation
2. Purchase of real property used in the sale of
INFO IN THE SLS services

1. MONTHLY TOTAL SALES VAT ON IMPORTATION

2. REGULAR BUYERS
3. CASUAL BUYERS 1. Importation of goods is subject to Vat
4. REGISTERED NAME OF BUYER
5 TIN OF BUYER 2. Vat is based on total value used by the Bureau of
6. EXEMPT SALES Customs in determining tariff and customs duties, excise
7. ZERO RATED SALES tax and other charges prior to the removal of goods from
Customs custody
3. When tariff and customs duties are determined on the
basis of quantity or volume of the goods, VAT is based on
landed cost
4. Landed cost is the invoice cost, freight, insurance,
customs duties, excise tax and other charges
EFFECTIVELY ZERO-RATED SALES
Effectively zero-rated sales of goods and properties shall
refer to the local sale of goods and properties by a vat-
registered person to a person or entity who was granted
indirect tax exemption under special laws:

VAT ON IMPORTATION 1. Sale of power or fuel generated through renewable

Typical charges prior to removal of goods from customs
custody: insurance, freight, postage, commission, interest,
bank charges, wharfage dues, arrastre charges, customs
brokerage fees, stamps, processing fee, customs duty,
and excise tax
sources of energy: solar, wind, hydropower, geothermal
2. Sales and services to persons granted indirect tax
exemption under special laws: enterprises registered with
the SBMA and CDA; PEZA; ADB and IRRI

• The Vat is payable prior to the removal of goods from

Customs

• The Vat is available as Vat input against the Vat output

PERCENTAGE TAXES

a. 3% on persons exempt from Vat threshold of P3 million

b. Domestic carriers
C. International carriers
d. Franchise tax
e. Overseas communication tax
f. Banks and quasi- bank activities
g. Non-bank financial intermediaries
Multiple Choice – VAT Theory: Part 2
h. Insurance companies
1. Generally, the tax basis of business tax is gone
i. Amusement tax
j. Winnings
k. Stock transactions A. SALES OR RECEIPTS

2. Who is the statutory taxpayer of business taxes?

ZERO-RATED TRANSACTIONS
A. THE SELLER WHO MUST BE ENGAGED IN TRADE
• Taxpayers belonging to this group are registered under OR BUSINESS
the Vat system However, they are engaged in sales or
exchanges of goods/services that are subject to output Vat 3. The economic taxpayers of consumption taxes are
rate of zero percent
d. Buyers, whether or not engaged in trade or
• These are mainly export sales by Vat registered persons business
which will generate the needed reserves of foreign
currencies 4. What is the method used to determine the VAT due and
payable?
• A zero-rated company shall not result in any output Vat;
but the input Vat on its purchases shall be available as
C. TAX CREDIT METHOD
a. Tax refund
b. Creditable input tax 5. Which statement is conceptually incorrect?
c. Tax credit certificate
B. THE BUYER PAYS THE CONSUMPTION TAX TO THE
REQUISITES OF ZERO-RATED EXPORT SALES GOVERNMENT

1. A vat-registered entity
2. Engaged in the sale and actual shipment of goods from 6. Which is correct?
the Phils to foreign country
3. Required to present certification that payments are B. THE SALES TO RESIDENTS MUST INCLUDE A
made in acceptable foreign currency BUSINESS TAX.

CONSIDERED EXPORT SALES 7. The deduction from Output VAT is called

1. Sales to bonded manufacturing warehouses of export-
C. INPUT VAT
oriented manufacturers
2. Sales to EPZA
3. Sales to foreign military bases 8. Which is a pure form of a sales tax?
4. Sales to non-resident Filipinos and balikbayans paid for
in foreign currency inwardly remitted thru the bank A. PERCENTAGE TAX
5. Commission income on export sales of export
registered trader 9. Statement 1. A business which pays VAT normally does not
6. Consigned goods actually sold by foreign consignees pay percentage tax. Statement 2: A business which pays
percentage tax also pays VAT. Which statement is correct?
 C. PAYABLE REGARDLESS OF THE PURPOSE OF THE
A. STATEMENT 1 IMPORTATION

10. Which of the following business taxes applies only for 20. The VAT on domestic sales is an example of good
domestic consumption?
a. VAT on sales B. AN INDIRECT TAX
b. Percentage tax
c. Excise tax
d. All of these

11. Excise tax is paid by

C. IMPORTERS OR MANUFACTURERS

12. Export sale is (select the incorrect one)

B. EXEMPT FROM VAT

13. Statement 1: Excise tax is always paid together with VAT or

percentage tax, Statement 2: Excise tax is paid at the point of
sale. Which statement is false?

C. BOTH STATEMENTS

14. Which is imposed with a tax of zero percent (0%)?

B. EXPORT SALES OF VAT-REGISTERED TAXPAYERS

15. Which is not subject to excise tax?

C. FOOD PRODUCTS

16. The tax basis of consumption tax on foreign purchase is

B. PURCHASE COSTS.

17. The consumption tax on domestic purchases is imposed

upon the
A. SALES OR RECEIPTS

18. Technically, the excise tax on the manufacture of certain

articles is payable only when the article is intended for

A. DOMESTIC CONSUMPTION

19. Which is correct with the VAT on importation?