VALUE ADDED TAX (VAT)

Regularity
Mandatory Registration This involves more than one isolated transaction and involves
Who are Required to Register for VAT? repetition and continuity of action, except:
 His gross sales or receipts for the past 12 months, other • Non-resident aliens who perform services in the Philippines
than those exempt under Sec. 109(A) to (CC), have are deemed to be making sales in the ordinary course of trade
exceeded ₱3M or business, even if the performance of service is not
 There are reasonable grounds to believe that his gross regular;
sales or receipts for the next 12 months, other than those • Importations are subject to VAT whether in the course of
exempt under Sec. 109(A) to (CC), will exceed ₱3M trade or business or not.
 Franchise grantees of radio and/or TV broadcasting
whose annual gross receipts of the preceding year Monthly VAT Declaration
exceed P10M derived from the business covered by the - BIR FORM 2550M
law granting the franchise; shall register within 30 days at
end of the calendar year. Deadline of BIR Form 2550M
Manual Filing Not- later than the 20th day following the end
Effect of Non-Registration of each month
 Obligee to pay VAT but he cannot claim input tax. Through Electronic Filing and Payment System (eFPS)- 21 –
 Cannot impose output Vat 25 days following the end of the month (on or before the
prescribed due dates enunciated in RR No. 16-2005
Optional Registration as VAT
 VAT exempt person in Sec 109 (CC) of NIRC; seller or - BIR FORM 2550Q
lessor of goods or services who’s actual or expected gross Deadline of BIR Form 2550Q
sales or receipts do not exceed the threshold amount of Within twenty five (25) days following the close of the
P3M for any 12 month period. taxable quarter.
 Any person who is VAT-registered but enters into
transactions which are exempt from VAT (mixed Reminders
transactions) may opt that the VAT apply to his • Only one consolidated Monthly VAT Declaration/Quarterly
transactions which would have been exempt under Sec. VAT Return shall be filed covering the results of operation of
109 of the Tax Code, as amended. the head office as well as the branches for all lines of business
 Franchise grantees of radio and/or television subject to VAT.
broadcasting whose annual gross receipts of the • The Quarterly Summary Lists of Sales and Purchases shall
preceding year do not exceed ten million pesos (P10M be submitted in Compact Disk-Recordable (CDR) following the
amended derived from the business covered by the law format provided under Section4.114-3(g) of RR No. 16-2005,
granting the franchise may op for VAT registration. This as amended by RR No. 1-2012.
option, once exercised, shall be irrevocable. • The Quarterly Summary Lists of Sales and Purchases shall
be submitted through electronic filing facility for taxpayers
Cancellation of VAT Registration under the jurisdiction of the Large Taxpayers Service (LTS)
Any person who elects to register under optional registration and those enrolled under the eFPS.
shall not be allowed to cancel his registration for the next
three (3) years. The cancellation for registration will be Output Tax- means the VAT due on the sale, lease or
effective from the first day of the following month the exchange of taxable goods or properties or services by any
cancellation was approved. person registered or required to register under Section 236 of
the Tax Code.
Credit-Invoice Method
- Payable is computed by deducting the input VAT from the Tax Base x VAT Rates = Output VAT
output VAT.
-A taxpayer’s tax payable is the excess of output tax over input Gross Selling Price- means the total amount of money or its
tax. equivalent which the purchaser pays or is obligated to pay to
-An entity can subtract from the VAT charged on its sales or the seller in consideration of the sale, barter or exchange of the
outputs the VAT it paid on its purchases, inputs and imports. goods or properties, excluding the value-added tax. The excise
tax, if any, on such goods or properties shall form part of the
Who are Required to File VAT Returns gross selling price.
• Any person or entity who, in the course of his trade or
business, sells, barters, exchanges, leases goods or properties GSP= gross sales – sales returns – sales allowances -
and renders subject to VAT, if the aggregate amount of actual sales discount
gross sales or receipts exceed P3M
• A person required to register as VAT taxpayer;
• Any person, whether or not made in the course of his trade or Transaction Rate Tax base
business, who imports goods. On sale of goods 12% GSP or gross value in money of the goods
and properties or properties sold, bartered or exchanged
In the Course of Trade or Business- regular conduct or On sale of 12% gross receipts derived from the sale or
pursuit of a commercial economic activity, including services and use exchange of services, including the use or
transactions incidental thereto, by any person regardless of or lease of Prop. lease of properties
whether or not the persons engaged therein is non stock, non On importation 12% • based on the total value used by the
profit organization or government entity. of Bureau of Customs in determining tariff and
• Commercial or economic activity goods customs duties, plus customs duties, excise
taxes, if any, and other charges, such as
• Regular, including incidental transactions tax
• W/N taxpayer is non-stock, non-profit to be paid by the importer prior to the
 release of such goods from customs spent for medical utilization of its members should not be
custody; included in the computation of its gross receipts.
• provided, that where the customs duties
are determined on the basis of quantity or Transactions Deemed Sales
volume of the goods, the VAT shall be
based on the landed cost plus excise taxes,
1. Transfer, use or consumption not in the course of business
if any. of goods or properties originally intended for sale or for use in
On export sales 0% Zero Rated Sales of Goods, Properties, and the course of business;
and other zero- Services 2. Distribution or transfer to:
rated sales 1. Shareholders or investors as share in the profits of
the VAT-registered persons; or
Sale of Real Properties 2. Creditors in payment of debt;
3. Consignment of goods if actual sale is not made within sixty
On Installment Plan On a Deferred Cash (60) days following the date such goods were consigned; and
Payment Basis 4. Retirement from or cessation of business, with respect to
- Means sale of real -Means sale of real -Total selling price inventories of taxable goods existing as of such retirement or
prop. by a real estate property by a real estate is paid immediately cessation
dealer, the initial dealer, the initial by the buyer.
payments of w/c in payments of which in the -Cash sale of real
the year of sale do year of sale exceed 25% properties shall be Appropriated for Personal Use
not exceed 25% of of the gross selling subject to 12% Transfer of goods or properties not in the course of business
the GSP. price. output tax based can take place when VAT-registered person withdraws goods
-Output VAT accrues -This is considered as on the gross selling from his business for his personal use;
every installment cash sale. price.
payment Consignment of Goods
if actual sale is not made within sixty (60) days following the
VAT on Installment Sale- the seller shall be subject to output date such goods were consigned. Consigned goods returned
VAT on the installment payments received, including interest by the consignee within the 60-day period are not deemed
and penalties for late payment. sold;

VAT on collection received = Actual collection (exclusive Change or Cessation of Status[Subject to Output Tax]
of VAT)÷ Selling Price x Output VAT Under Sec. 4.106-8(a) of RR No. 2005, VAT shall apply to
goods or properties originally intended for sale or lease in
Gross Receipts- the total amount of money or its equivalent business, and capital goods which exist as of the occurrence of
representing the contract price, compensation, service fee, the following:
rental or royalty, including the amount charged for materials • change of business activity from VAT to VAT-exempt status;
supplied with the services and deposits and advanced • approval of a request for cancellation of registration due to
payments actually or constructively received during the taxable reversion to exempt status;
quarter for the services performed or to be performed for • approval of a request for cancellation of registration due to a
another person, excluding value-added tax. desire to revert to exempt status after the lapse of three (3)
= Cash received + deposits/advance payments + materials consecutive years from the time of registration by a person
who voluntarily registered despite being exempt under Sec.
Constructive Receipts 109(2) of the Tax Code; and
Means that the money consideration or its equivalent is already • approval of a request for cancellation of registration of one
under the control of the person rendering the services without who commenced business with the expectation of gross
restrictions by the payor. sales/receipts exceeding P3,000,000 but who failed to exceed
• Bank deposits without restrictions; this amount during the first 12 months of operation.
• Issuance by the debtor of a notice to offset any debt or
obligation and acceptance thereof by the seller as payment for Change or Cessation of Status [Not Subject to Output Tax]
services rendered; Transfer of property pursuant to Section 40(C)(2) of the NIRC,
• Transfer of the amounts retained by the contractee to the as amended, shall be exempt from VAT
account of the contractor. • Tax-free reorganizations
• Transfer pursuant to a plan of merger or
Non-Resident Foreign Corporation Lessor consolidation;
-An NRFC is generally taxable at 25% final withholding tax • Stock or Asset Acquisition in exchange of stock
(FWT) and at 12% final withholding value-added tax (FWVAT). • Recapitalization;
-The lessee shall be responsible for the payment of the VAT on • Reincorporation;
such • Transfer to a controlled corporation
rentals/royalties on behalf of the NRFC.
Output Tax for Transactions Deemed Sale
Non-Life Insurance Companies • The output tax shall be based on the market value of the
• Non-Life Insurance Companies are subject to VAT of 12% of goods
their gross receipts. They are not liable to the payment of the deemed sold as of the time of the occurrence of the
premium tax under Sec. 123 of the Tax Code. transactions
• Non-Life reinsurance premiums are subject to VAT deemed sale;
• Insurance and reinsurance commissions, whether life or non • In the case of retirement or cessation of business, the tax
life, are subject to VAT. base shall be the acquisition cost or the current market price of
the goods or properties, whichever is lower;
Health Maintenance Organizations • In the case of a sale where the gross selling price is
The Court likewise rules that for purposes of determining the unreasonably lower (if lower by more than 30%) than the fair
VAT liability of an HMO, the amounts earmarked and actually market value, the actual market value shall be the tax base.
 Registered Export Enterprise- Refers to an export enterprise
that is also a registered business Enterprise.

Ecozones and Freeport Zones

ZERO-RATED Sales Sales to existing registered export enterprise located inside
ecozones and freeport zones shall also be qualified for VAT
Zero Rated Sales of Goods or Properties zero-rating until the expiration of the transitory period.
-(by a VAT-registered person) is a taxable transaction for VAT Zero Rated Sales of Services
purposes, but shall not result in any output tax. However, the (by a VAT-registered person) is a taxable Transaction for VAT
input tax on purchases of goods, properties or services related purposes, but shall not result in any output tax. However, the
to such zero-rated sale shall be available as tax credit or input tax on purchases of goods, properties or services related
refund. to such zero-rated sale shall be available as tax credit or
refund
Value-added Tax Zero-Rating & Exemption 1. Services other than processing, manufacturing or
The VAT exemption an importation and VAT zero-rating on repacking rendered to a person engaged in business
local conducted outside the Philippines or to a non-
purchases shall only apply to goods and services directly and resident person not engaged in business who is
exclusively used in the registered project or activity of a outside the Philippines when the services are
registered export enterprise, for a maximum period of performed, the consideration for which is paid for in
seventeen (17) years from the date al registration, unless acceptable foreign currency and accounted for in
otherwise extended under the SIPF. accordance with the rules and regulations of the
BSP;
Directly and Exclusively Used 2. Services rendered to persons or entities whose
The direct and exclusive use for the registered project or exemption from direct and indirect taxes under
activity refers to raw materials, inventories, supplies, special laws or international agreements to which the
equipment, goods, packaging materials, services, including Philippines is a signatory effectively subjects the
provision of basic infrastructure, utilities, and maintenance, supply of such services to zero percent (0%) rate;
repair and overhaul o{ equipment, and other expenditures 3. Sale of services, including provision of basic
directly attributable to the registered project or activity without infrastructure, utilities, and maintenance, repair, and
which the registered project or activity cannot be carried out; overhaul of equipment, to a registered export
Provided, That the VAT zero-rating on local purchases shall be enterprise, to be used directly and exclusively in its
granted upon the endorsement of the concerned lPA, in registered project or activity for a maximum period of
addition to the documentary requirements of the BlR. 17 years from the date of registration.
4. Services rendered to persons engaged in
The following sales by VAT-registered persons shall be international shipping or air transport operations,
subject to zero percent (0%) rate: including leases of property for use thereof: Provided,
A. Export Sales that these services shall be exclusively for
1. Sale and Actual Shipment. The sale and actual international shipping or air transport operations.
shipment of goods from the Philippines to a foreign 5. Transport of passengers and cargo by domestic air
country, irrespective of any shipping arrangement that or sea vessels from the Philippines to a foreign
may be agreed upon which may influence or country.
determine the transfer of ownership of the goods so 6. Sale of power or fuel generated through renewable
exported, paid for in acceptable foreign currency or its sources of energy such as, but not limited to,
equivalent in goods or services, and accounted for in biomass, solar, wind, hydropower, geothermal and
accordance with the rules and regulations of the BSP steam, ocean energy, and other emerging sources
2. Sale to International Carrier. The sale of goods, using technologies such as fuel cells and hydrogen
supplies, equipment fuel to persons engaged fuels.
international shipping or international air transport 7. Services rendered to offshore gaming licensees
operations; Provided, that the goods, supplies, subject to gaming tax under Section 125-A, NIRC by
equipment, and fuel shall be used exclusively for service providers, including accredited service
international shipping or air transport. The portion providers as defined in Section 27 (G), NIRC.
used otherwise shall be subject to 12% VAT.

B. Sales to persons or entities whose exemption from

direct and indirect taxes under special laws or
international agreements to which the Philippines is a
signatory effectively subjects such sales to zero rate.
• Sales to Asian Development Bank (ADB);
• Sales to International Rice Research Institute (IRRI).
• RA 10068 (Organic Agriculture Act of 2010) and
• RA 10659 (Sugarcane Industry Development Act of
2015).

C. Sale of raw materials, inventories, supplies,

equipment, packaging materials, and goods to a
registered export enterprise, to be used directly and
exclusively in its registered project or activity for a
maximum period of 17 years from the date of
registration.
 • Importation of goods and properties brought into the
VAT Exempt Transactions/Persons Philippines for whatever purposes, whether for use in business
or not are subject to VAT transactions
VAT Exempt Transactions • Except for importations specifically exempted from 12% VAT
VAT EXEMPT sale is a sale of goods, properties or service rate under Section 109.
and the use or lease of properties which is not subject to • Importation of any vehicle, vessel, aircraft, machinery, other
output tax and whereby the buyer is not allowed any tax credit goods for use in the manufacture and merchandise shall be
or input tax related to such exempt sale. subject to duties, taxes, and other charges
(A) Sale or importation of
 agricultural (raw cane sugar, ordinary salt, copra, etc.) (E) Services subject to percentage tax under Title V;
and marine food products (fish, lobsters, shrimps) in their For Example:
original state, • Services rendered by domestic common carriers by land for
Original State- those products shall be considered in their the transport of passengers and keepers of garages [Sec. 117,
original state even if they have undergone the simple NIRC];
• Services rendered by international air/shipping carriers [Sec.
118, NIRC];
• Services rendered by franchise grantees of radio and/or
television broadcasting whose annual gross receipts of the
preceding year do not exceed P10,000,000 and by franchise
grantees of gas and water utilities [Sec. 119, NIRC];

(F) Services by agricultural contract growers and milling

for others of
• palay into rice,
• corn into grits and
• sugar cane into raw sugar
(G) Medical, dental, hospital and veterinary services
except those Rendered by professionals.
processes of preparation or preservation for the market, such
as freezing, drying, salting, broiling, roasting, smoking or
stripping. Polished and/or hushed rice, corn grits, raw sugar or
raw cane sugar and molasses, ordinary salt and copra shall be
considered in their original state;
 Livestock (cows, pigs, goats, rabbits), and
 poultry of a kind (fowls, ducks, geese) generally used as, (H) Educational services rendered by private educational
or yielding or producing foods for human consumption; institutions, duly accredited by the (DepEd), (CHED),
and breeding stock and genetic materials therefor. (TESDA) and those rendered by government educational
(B) Sale or importation of institutions
• fertilizers; (I) Services rendered by individuals pursuant to an
• seeds, seedlings and fingerlings; employer-employee relationship
• fish, prawn, livestock and poultry feeds, including ingredients, (J) Services rendered by regional or area headquarters
whether locally produced or imported, used in the manufacture established in the Philippines by multinational
of finished feeds (except specialty feeds for race horses, corporations which act as supervisory, communications
fighting cocks, aquarium fish, zoo animals and other animals and coordinating centers for their affiliates, subsidiaries
generally considered as pets); or branches in the Asia-Pacific Region and do not earn or
(C) Importation of personal and household effects derive income from the Philippines
belonging to (K) Transactions which are exempt under international
• the residents of the Philippines returning from abroad and agreements to which the Philippines is a signatory or
• nonresident citizens coming to resettle in the Philippines: under special laws, except those under Presidential
Provided, that such goods are exempt from customs duties Decree No.529
under the Tariff and Customs Code of the Philippines
(D) Importation of VAT Exempt under Special Laws
• professional instruments and implements, tools of trade, • PD No. 1869 (PAGCOR Charter)
occupation or employment, • RA 9295 (Domestic Shipping Development Act of 2004)
• wearing apparel, • RA 9367 (Biofuels Act of 2006)
• domestic animals, and • RA 9520 (Philippine Cooperative Code of 2008)
• personal and household effects • RA 10072 (Philippine Red Cross)
belonging to persons coming to settle in the Philippines or • RA 10073 (New Girl Scouts of the Philippines Charter)
Filipinos or their families and descendants who are now • RA 10744 (Credit Surety Fund Cooperative Act of 2015)
residents or citizens of other countries, such parties hereinafter • RA 10747 (Rare Diseases of the Philippines)
referred to as overseas Filipinos, in quantities and of the class (L)
suitable to the profession, rank or position of the persons • Sales by agricultural cooperatives duly registered with the
importing said items, for their own use and not for barter sale, Cooperative Development Authority to their members
accompanying such persons, or arriving within a reasonable • as well as sale of their produce, whether in its original state or
time processed form, to non-members;
• their importation of direct farm inputs, machineries and
Rule on Importation equipment, including spare parts thereof, to be used directly
and exclusively in the production and/or processing of their (R) Sale, importation, printing or publication of books and
produce any newspaper, magazine, review or bulletin, or any such
educational reading materials covered by the United
Nations Educational, Scientific and Cultural Organization
(UNESCO) Agreement on the importation of educational scientific
and cultural materials, including the digital or electronic format thereof.
Provided, that the material enumerated herein are not devoted
principally to the publication of paid advertisements. Provided further,
that the materials enumerated herein are compliance with the
requirements set forth by the National Book Development Board
pursuant to R.A. No. 8047. (CREATE)
(S) Transport of passengers by international carriers.

(M) Gross receipts from lending activities by credit or

multi-purpose cooperatives duly registered with the
Cooperative Development Authority
(N) Sales by non-agricultural, non-electric and non-credit
cooperatives duly registered with the Cooperative
Development Authority: Provided, That the share capital (T) Sale, importation or lease of passenger or cargo
contribution of each member does not exceed vessels and aircraft, including engine, equipment and
Fifteen thousand pesos (₱15,000) and regardless of the spare parts thereof for domestic or transport operations;
aggregate capital and net surplus ratably distributed among the (U) Importation of fuel, goods and supplies by persons
members engaged in international shipping or air transport
Sale of electricity by generation, transmission by any entity operations:
including the National Grid Corporation of the Philippines Provided, That the fuel, goods, and supplies shall be used for
(NGCP), and distribution companies including electric international shipping or air transport operations;
cooperatives shall be subject to twelve percent (12%) VAT on (V) Services of bank, non-bank financial intermediaries
their gross receipts performing quasi-banking functions, and other non-bank
(O) Export sales by persons who are not VAT-registered. financial intermediaries;
Corporation has the following data: (W) Sale or lease of goods and services to senior citizens
• Export Sale, P1,000,000 and persons with disability, as provided under Republic Act
• Purchase, P500,000 Nos. 9994 (Expanded Senior Citizens Act of 2010) and 10754
(P) The following sales of real properties are exempt from (An Act Expanding the Benefits and Privileges of Persons With
VAT (effective Jan. 1, 2018), namely: Disability), respectively;
• Sale of real properties not primarily held for sale to customers or held
for lease or use in the ordinary course of trade or business.
• Sale of real properties utilized for low-cost housing as defined by RA
No. 7279
• 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 the price ceiling per unit is P450,000.00 or as may
from time to time be determined by the HUDCC and the NEDA and
other related laws.
• Sale of residential lot valued at One Million Five Hundred Thousand
Pesos (P1,500,000.00) and below, or house & lot and other residential
dwellings valued at Two Million Five Hundred Thousand Pesos
(P2,500,000.00) and below, as adjusted in 2011 using the 2010
Consumer Price Index values.
VAT EXEMPT HOUSING ( CHECK SA SLIDES) Sale of Goods or Services to Senior Citizens
Twenty Percent (20%) Discount and VAT Exemption - The
(Q) Lease of a residential unit with a monthly rental not senior citizens shall be entitled to the grant of twenty percent (20%)
exceeding Fifteen thousand pesos (₱15,000); discount and to an exemption from the value-added tax (VAT), IF
APPLICABLE, on the sale of the goods and services covered by
Section 1 to 6 of this Article, from all establishments for the exclusive
use and enjoyment or availment of senior citizens
(X) Transfer of property pursuant to Section 40(C)(2) of the
NIRC, as amended;
• Tax-free reorganizations
• Transfer pursuant to a plan of merger or consolidation;
• Stock or Asset Acquisition in exchange of stock
• Recapitalization;
Lease of a Residential Unit • Reincorporation;
The term ‘residential units’ shall refer to • Transfer to a controlled corporation
• apartments and houses & lots used for residential purposes, and (Y) Association dues, membership fees, and other
• buildings or parts or units thereof used solely as dwelling places (e.g., assessments and charges collected by homeowners
dormitories, rooms and bed spaces) except motels, motel rooms, associations and condominium corporations;
hotels and hotel rooms, lodging houses, inns and pension houses. (Z) Sale of gold to the Bangko Sentral ng Pilipinas (BSP);
(AA) Sale of or importation of prescription drugs and In the case of tax-free importation of goods into the Philippines by
medicines for: persons, entities or agencies exempt from tax where such goods are
• Diabetes, high cholesterol, and hypertension beginning January 1, subsequently sold, transferred or exchanged in the Philippines to non
2020 exempt persons or entities, the purchasers, transferees or recipients
• Cancer, mental illness, tuberculosis, and kidney diseases beginning shall be considered the importers thereof, who shall be liable for any
January 1, 2021 internal revenue tax on such importation. The tax due on such
The exemption shall apply to the sale or importation by the importation shall constitute a lien on the goods superior to all charges
manufacturers, distributors, wholesalers, and retailer of drugs and or liens on the goods, irrespective of the possessor thereof.
medicines included in the “list of approved drugs and medicines”
issued by the DOH for this purpose.
(BB) Sale or importation of the following beginning
January 1, 2021 to December 31, 2023:
• Capital equipment, its spare parts and raw materials, necessary for
the production of personal protective equipment components such
as coveralls, gown, 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
• All drugs, vaccines, and medical devices specifically prescribed and
directly used for the treatment of COVID-19
• Drugs for the treatment of COVID-19 approved by the FDA for use in
clinical trials, including raw materials directly necessary for the
production of such drugs
(CC) 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 P3M

Other Taxpayers Exempt From VAT

• Individuals engaged in business where the gross sales or
receipts do not exceed P100,000 during any 12-month period
(Marginal Income Earners);
• Franchise grantees of radio/television broadcasting whose
annual gross receipts do not exceed P10,000,000; Input Tax on Depreciable Goods
• Regional or are headquarters established in the Philippines Input VAT on goods purchased on or after Jan. 1, 2022 shall be fully
by multinational corporations; and recognized outright and may be claimed as input tax credits against
• PEZA and other ecozones, SMBA and other free port zone- output tax. On the other hand, if the purchase was made on or before
registered enterprise enjoying the preferential tax rate of 5% in Dec. 31,2021, the taxpayer can still amortize its input VAT until the
lieu of all taxes same is fully utilized.

Credits for Input Tax

Input tax means the VAT due on or paid by a VAT-registered on
importation of goods or local purchase of goods, properties or services,
including lease or use of property in the course of his trade or
business.
It shall also include the transitional input tax determined in accordance
with Section 111 of the Tax Code, presumptive input tax and deferred
input tax from previous period.

Pointers in Input Tax

• Only a VAT-registered person can claim input tax;
• No input value-added tax shall be allowed on purchases of goods or
properties for personal use;
• Should be actually paid and substantiated with invoice or official
receipts; and
• Input tax attributable to zero-rated sales by a VAT-registered person
may, at his option, be refunded or applied for a tax credit certificate.

Sources of Input Tax

1. Local Purchases
2. Importation
3. Purchases of real properties for which VAT has actually paid
4. Purchases of services in which a VAT has actually been paid
Effective Jan. 1, 2021, the five percent final withholding Value-Added
5. Transaction deemed sale
Tax (VAT) from sales to the government or any of its political
6. Presumptive Input Tax
subdivisions, instrumentalities, or agencies, including all government-
7. Transitional Input Tax
owned or -controlled corporations (GOCCs) shall be treated as
creditable withholding tax.
VAT on Importation
Importation of goods and properties brought into the Philippines for
Presumptive Input Tax Credits
whatever purposes, whether for use in business or not are subject to
Persons or firms engaged in the processing of sardines, mackerel and
VAT transactions except for importations specifically exempted from
milk, and in manufacturing refined sugar and cooking oil, shall be
12% VAT rate under Section 109. The VAT is paid directly by the
allowed a presumptive input tax, creditable against the output tax,
importer.
equivalent to (4%) of the gross value in money of their purchases of
Importation by Tax Exempt Persons
primary agricultural products which are used as inputs to their
production. Period of Grant of Refund/Credit
In proper cases, the Commissioner of Internal Revenue shall grant
refund for creditable input taxes within ninety (90) days from the date
of submission of the official receipts or invoices and other documents
in support of the application.

Taxpayer’s Remedy in Case of Denial

In case of full or partial denial of the claim for tax refund, the taxpayer
affected may, within thirty (30) days from the receipt of the decision
denying the claim, appeal the decision with the Court of Tax Appeals.

Manner of Giving Refund

Refund shall be made upon warrants drawn by the Commissioner of
Internal Revenue or by his duly authorized representative without the
necessity of being countersigned by the Chairman, Commission on
Audit (COA), the provision of the Revised Administrative Code to the
Transitional input tax on the inventory is allowed on the contrary notwithstanding: Provided, That refunds under this paragraph
following: shall be subject to post audit by the COA.
• Goods purchased for resale in their present condition
• Materials purchased for further processing, but which have not yet
undergone processing EXCISE TAX
• Goods which have been manufactured by the taxpayer is a tax on the production, sale or consumption of a
• Goods in process for sale or commodity in a country.
• Goods and supplies for use in the course of the taxpayer’s trade or -are internal taxes that are levied on the sale of specific goods and
business as a VAT-registered person services, such as alcohol, fuel and tobacco.
An excise tax is an indirect tax that is not paid by the customers
Claim for VAT Refund/Tax Credit directly— instead, the excise tax is imposed on the supplier or the
There are two instances where a taxpayer may claim for refund: producer, who then includes it in the product price.
• Sales of goods, properties or services which are zero-rated or
effectively zero-rated; and
• Cancelled registration due to retirement from or cessation of
business, or due to changes in or cessation of status under Sec. 106
(C) of the Tax Code.

Zero-rated and Effectively Zero-rated Sales of Goods, Properties

or Services
• A VAT-registered person whose sales of goods, properties or
services are zero-rated or effectively zero-rated may apply for the
issuance of a tax refund of input tax attributable to such sales.
• The input tax that may be subject of the claim shall exclude the
portion of input tax that has been applied against the output tax.
• The application should be filed within two (2) years after the close of
the taxable quarter when such sales were made.
• In case of zero-rated sales under Secs. 106(A)(2)(a)(1) and (3), Secs.
108(B)(1) and (2) of the Tax Code, the payments for the sales must
have been made in acceptable foreign currency duly accounted for in
accordance with the BSP rules and regulations.
• In case of Mixed 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. Documentary Stamp Tax
• In the case of a person engaged in the transport of passenger and -is a tax on documents, instruments, loan agreements and
cargo by air or sea vessels from the Philippines to a foreign country, papers evidencing the acceptance, assignment, sale or
the input taxes shall be allocated ratably between his zero-rated sales transfer of an obligation, right or property incident thereto.
and non-zero-rated sales (sales subject to regular rate, subject to final --BIR FORM 2000
VAT withholding and VAT-exempt sales). ---BIR FORM 2000OT
Who Shall File?
Cancellation of VAT Registration
A VAT-registered person whose registration has been cancelled due to
1. In the case of constructive affixture of documentary stamps,
retirement from or cessation of business, or due to changes in or by the person making …. documents, …. wherever the
cessation of status under Sec. 106 (C) of the Tax Code may, within document is made, signed, issued, accepted or transferred
two when the obligation or right arises from Philippine sources or
(2) years from the date of cancellation, apply for the issuance of tax the property is situated in the Philippines at the same time
credit certificate for any unused input tax which he may use in payment such act is done or transaction had;
of his other internal revenue taxes 2. In the case of Electronic Documentary Stamp Tax (eDST)
System user, by the taxpayers belonging to the industries ….
Provided, further, that the date of cancellation being referred hereto is
the date of issuance of tax clearance by the BIR, after full settlement of
3. By a revenue collection agent for remittance of sold loose
all tax liabilities relative to cessation of business or change of status of documentary stamps.
the concerned taxpayer:
When to File?
Where to File the Claim for Refund/Credit The return shall be filed within five (5) days after the close of
Claims for refunds shall be filed with the appropriate Bureau of Internal the month when the taxable document was made, signed,
Revenue (BIR) Office (Large Taxpayers Service (LTS), Revenue issued, accepted or transferred or when reloading a metering
District machine becomes necessary or upon remittance by revenue
Office (RDO)) having jurisdiction over the principal place of business of
the taxpayer. Claims for input tax refund of direct exporters shall be
collection agents of collection from the sale of loose stamps.
exclusively filed with the VAT Credit Audit Division (VCAD).
Who Shall File?
By the following person making, signing, issuing, accepting or
transferring the document or facility evidencing transaction:
1. Every natural or juridical person, resident or non-resident,
for sale, barter, exchange or other onerous disposition of
shares of stock in a domestic corporation, classified as capital
asset, not
traded in the local stock exchange;
2. Every withholding agent/buyer/seller on the sale, transfer or
exchange of real property classified as capital asset. The
"sale" includes pacto de retro sale and other forms of
conditional sale; and
3. Every withholding agent/buyer/seller on the sale, transfer or
exchange of real property classified as ordinary asset.