Value-Added Tax (VAT)

A report by Rommelito Francisco E. Macarayo

PCU-COL Law Student
 What is VAT?
• VAT is a uniform tax ranging from 0%-12% levied on every importation of
goods, whether or not in the course of trade or business, or imposed on
each sale, barter, exchange or lease of goods or properties or on each
rendition of services in the course of trade or business (Sec. 105 NIRC) as
they pass along the production and distribution chain.
• The tax is limited only to the value added to such goods, properties or
services by the seller, transferor, or lessor (CIR vs. Seagate Technology,
GR # 153866, February 11, 2005).
• The VAT system assures fiscal adequacy through the collection of taxes
on every level of consumption, yet assuages the manufacturers or
providers of goods and services by enabling them to pass on their
respective VAT liabilities to the next link of the chain until finally the end
consumer shoulders the entire tax liability (CIR vs. Magsaysay Lines, Inc.,
GR # 146984, July 28, 2006).
Concept of VAT
Characteristics of VAT