Business &

Transfer Taxes
Value-added Tax on Sale of Services
Business & Transfer Taxes

SALE OR EXHANGE OF
SERVICES".

Sale or exchange of services"

means the performance of all
kinds of services in the
Philippines for others for a fee,
remuneration or consideration
(but there must be no employer -
employee relationship)
Business & Transfer Taxes

SALE OR EXHANGE OF
SERVICES".
Illustration 1
A lease contract entered into in the
Philippines by a citizen of the
Philippines who is a dealer in real
estate, for use of an apartment in
New York USA by citizen of the
Philippines.
Business & Transfer Taxes

Businesses that are subject to VAT?

(a)Hotels, motels, inns, pension houses and
resorts;
(b) Restaurants, cafes and other eating places;
(c)Security agencies;
(d)Warehouses;
(e)Forwarders (On forwarding of cargoes);
Business & Transfer Taxes
Statutory definition and enumeration of
sale of services.
Sale of services (during trade or business)
includes formed or rendered by (statutory
provision):
(a) Construction and service contractors,
(b) Stock, real estate, commercial, customs
and immigration brokers:
(c) Lessors of property, whether personal
or real:
(d) Warehousing services;
 Business & Transfer Taxes
(e) Lessors or distributors of cinematographic
films;
(f) Persons engaged in milling, processing,
manufacturing or repacking of goods for
others;
(g)Proprietors, operators, or keepers of hotels,
motels, rest houses, pension houses, inns,
resorts:
(h) Proprietors or operators of restaurants,
refreshment parlors, café sand other eating
places, including clubs and caterers:
(I)Dealers in securities:
Business & Transfer Taxes

(J) Lending investors;

(k) Transportation contractors on their
transport of goods or cargoes, including
persons who transport goods or cargoes for
hire and other domestic common carriers by
land, relative to their transport of goods or
cargoes,
(L) Common carriers by air and sea relative
to their transport of passengers, goods or
cargoes from one place in the Philippines to
another place in the Philippines,
Business & Transfer Taxes

(m) Sales of electricity by generation

companies, transmission, and distribution
companies:
(n) Services of franchise grantees of electric
utilities, telephone and telegraph, radio and
television broadcasting and all other franchise
grantees, except those under Section 119 of
the National Internal Revenue Code who are
subject to percentage tax;
(o) Non-life insurance companies (except
their crop insurances), including surety,
fidelity and bonding companies
Business & Transfer Taxes
(p) Similar services regardless of
whether the performance thereof
calls for the exercise or use of the
physical or mental faculties.
(q) The lease or the use of or the
right or privilege to use any copy
right, patent, design or model,
plan, secret formula or process,
goodwill, trademark, trade brand
and other like property or right;
Business & Transfer Taxes
(r) The lease or the use of, or the
right to use of any industrial,
commercial or scientific
equipment:
(s) The supply of scientific,
technical, industrial or
commercial know ledge or
information;
Business & Transfer Taxes
(t) The supply of any assistance that is ancillary
and subsidiary to, and is furnished as a means of
enabling the application or enjoyment of any
such property, or right as is enumerated in letter
(r) hereof or any such knowledge or information
as is mentioned in subparagraph (s);
(u) The supply of services by a non-resident
person or his employee in connection with the
use of property or rights belonging to, or the
installation or operation of any brand, machinery
or other apparatus purchased from such non-
resident person;
Business & Transfer Taxes
(v) The supply of technical advice, assistance or
services rendered in connection with technical
management or administration of any scientific,
industrial or commercial undertaking, venture,
project or scheme;
(w) The lease of motion picture films, tapes and
discs;
(x) The lease or use of or the right to use radio,
television, satellite transmission and cable
television time
Thank You