Value Added Tax Sale

Barter
Business taxes are those imposed on onerous transfers Exchange
1. Value Added Tax Importation
2. Other Percentage Tax
3. Excise Taxes

Nature and Characteristics of VAT

1. Levied on the value-added on certain goods, properties and services in the domestic
market and/or importer of goods.
2. Imposed on the privilege of selling or importing of goods or rendering services
3. Indirect tax
4. National tax the burden of tax may be shifted or passed
on to the buyer, transferee or lessee of the
5. Proportional - 12%
goods, properties or services

Persons liable

any person who, in the course of trade or business, regular conduct or pursuit of a
sells, barters, exchanges, leases goods or properties, commercial or an economic
renders services, and any person who imports good activity, including transactions
incidental thereto, by any
subject to VAT whether in the course person regardless of whether
of trade or business or not or not the person engaged
therein is a non-stock, non-
Are Non-resident subject to VAT? profit private organization, or
government entity
services rendered in the PH by nonresident
foreign persons shall be consideres as
being in the course of trade or business. Vatable if entered into
business transactions
Computation:

Output Vat PXX

Less:
Input Vat (XX)
Creditable Withholding Vat, if any
Vat withheld by the government (XX)
Vat withheld on nonresident payees (XX)
Vat Payable PXX
 Transaction Deemed Sale shareholders
creditors
SCORe Co 60 originally intended for use in business
retirement or cessation
consignment: unsold within 60 days

1. transfer, use or consumption (TUC) not in the

course of business of goods or properties
originally intended for sale or of use in the
shareholders or investors as share in the
course of business
profits of the Vat-registered persons
2. distribution or transfer to
creditors in payment of debt
3. consignment of goods if actual sale is not made
within 60 days following the day such goods we're consigned
4. retirement from or cessation of business, with respect to inventories of taxable goods
existing as of such retirement or cessation
-change of ownership of business
-dissolution of a partnership and creation of a new partnership
-change of business activity from Vat taxable status to vat exempt status
-approval of a request for cancellation of registration
Note: change of control of business, merger & consolidation, Exempt

Privilege Stores (tiangge) -temporary, for a short-period of time during special events
-subject to vat or business tax in general? It depends:

1. must not operate for a cumulative period not exceeding 15 days.

2. if the PS is operating >1 business activity in a separate venue or
simultaneously operating multiple business activities in 1 venue, it
shall be considered 1 day per business activity

not liable for business tax - if pasok sa 15 days but liable for income tax

Vat Base
Vat base Summary

Transaction Vat Base

Sale of goods Gross Selling Price
Sale of services Gross Receipts
Lease of Goods or Properties Gross Receipts
 total amount of money or its equivalent which the
Gross Selling Price purchaser pays or is obligated to pay excluding VAT.
plus the excise tax, if any,
Allowable Deductions: “Actual payment is not required”
1. Sales returns and allowances
2. Discounts determined and granted at the time of sale
expressly indicated in the invoice
the amount thereof forming part of the gross
sales duly recorded in the books of accounts
not dependent upon the happening of a future event or condition

trade discount/volume discount - deducted in GSP

cash discount/purchase discount/sales discount - example: 2/10, n30 - not deductible

Presumed GSP
-if GSP is lower by more than 30% of the actual MV of the same goods of the same
quantity and quality sold in the immediate locality on or nearest the date of sale

CIR shall determine the If one of the parties in the transaction is

appropriate tax base except: the Government, (use Selling Price)

Gross Receipts “Actual payment is required”

amount charged for materials supplied with the services

Inclusions: deposits applied as payments for services
advance payments actually or constructively received

Advance payments in a Lease Contract -bank deposit

-offseting of debt or obligation
1. Loan -transfer of amounts retained by
2. Option money not subject to VAT the payor to the contractor
3. Security deposit
4. Prepaid Rental subject to VAT

amounts earmarked for payment to unrelated third party

Exclusions: received as reimbursement for advance payment on behalf of another
which do not redound to the benefit of the payor
VAT
 Transaction Vat base
Vat Base: Real Property
Fully paid GSP or FMV whichever is higher
Deferred basis GSP or FMV whichever is higher
Installment basis Installment received

Installment VS. Deferred Basis

Installment basis Deferred basis

Seller Real estate dealer Real estate dealer
Initial payments ≤ 25% of GSP > 25 % of GSP
Base Installment received Higher of FMV or GSP
including interest and penalties

Downpayment PXX
Add:
other collections during the year XX
excess of unpaid mortgage over cost XX
Initial Payment XX
whichever is higher

Installment sale Collections

X GSP or FMV
GSP
higher between:
FMV per tax declaration = assessed value
FMV per BIR = zonal value
Special VAT base Rules

Dealer in securities Gross Income (GSP less cost)

Electricity Gross Receipts (amount charged)
Non-Life Insurance Gross Receips (whether money, notes, or credits)
Millers Gross Receipts (if miller received milled products, MV)

Transaction Deemed Sale:

TUC not in OCB MV
creditors/shareholders MV
60-day consignment MV
Retirement/Cessation Acquisition cost or MV, whichever is lower
 Vat on Importation

Destination Principle
As a general rule, the VAT system uses the destination principle as a basis for the jurisdictional
reach of the tax. Goods and services are taxed only in the country where they are consumed.
Thus, exports are zero-rated, while imports are taxed.
Remember: Zero-rated sales are vat subject transactions. Iba yung Zero-rated sa Vat exempt

The act of bringing in of goods from a foreign territory into PH

Importation territory, whether for consumption, warehousing, or admission
when the carrying vessel or aircraft enters into PH territory
Begins:
with the intention to unload therein
A. The duties, taxes and other charges have been paid at the port of
Ends: entry and legal permit for withdrawal has been granted
Upon issuance of B. In case the goods are deemed free of duties, taxes and other
charges, when the goods have legally left the jurisdiction of the BOC

based on value “ad valorem”

Tax Base
based on quantity “specific” Landed cost

Ad Valorem:
CIF = Cost, Insurance, and Freight Specific:
“Duty ni CEO”

Dutiable value PXX Invoice Amount PXX

Customs duties XX Customs duties XX
+ Excise taxes XX Insurance XX
Other legal charges XX Freight XX
Vat base on importation XX Other legal charges XX
x 12% Landed Cost XX
VAT on importation XX postage Excise taxes, if any XX
wharfage dues Vat base on importation XX
arrastre x 12%
Facilitation fee - illegal
brokerage fee VAT on importation XX

Rate: 12%
Taxpayer: Importer
Rules on Vat
Payable to: BOC
on Importation
When: Before goods leave customs custody
Whether the goods are for business or personal use
 person whether or not made in
any entity who brings goods the ordinary course of
Persons liable agency into the PH trade or business
non-exempt persons or entities who acquire tax-free
imported goods from exempt persons, entities, or agencies.

If imported by Vat-exempt persons, entities, or agencies which are subsequently sold,

transferred or exchanged in the PH to non-exempt persons or entities, the latter shall
be considered the importers, liable for Vat.

Extended Application areas in the PH where customs and

tariff law may be enforced
Applies to technical importation of goods sold
by a person located in a Special Economic Zone The ECOZONES shall be managed and
to a customer located in a custom's territory operated by the PEZA as a separate
customs territory
If may flow ng goods between ecozones and
anywhere outside of the ecozones within
Foreign territory "by fiction of law"
the customs territory of the PH, its as if
may importation and exportation.

Freeport zones - isolated and policed area adjacent to a port of entry, which shall be
operated and managed as a separate customs territory
Special Economic zones - a selected area, which shall be operated and managed as a
separate customs territory that is highly developed or has the potential to be developed.

Export Sale or Zero-rated Sale

CuSTOm ENGInE
A zero-rated sale of goods or
properties by a vat registered Separate CUstoms territory
person is a taxable transaction for Special laws
VAT purposes, but shall not result international Transport operations
in any output tax. However, input OMnibus investment code
tax on purchases of goods, Export sales
properties or services, attributable Non-residents for delivery of a resident local EOE
to such zero-rated sale, shall be offshore Gaming operations
available as tax credit or refund. INternational agreements
Export oriented enterprise (EOE)
 Zero-rated sale of Goods
1. Sale and delivery to registered enterprises within a separate customs territory as provided
under special law
-The VAT exemption on importation and VAT zero-rating on local purchases shall only apply to
goods and services directly and exclusively used in the registered project or activity by a
registered business enterprise. (CREATE)

refers to raw materials, inventories, supplies, equipment, goods, services

and other expenditures necessary for the registered project or activity
without which the registered project or activity cannot be carried out.

Janitorial services not considered as

Security services “directly and exclusively used"
Local purchases of
Financial services
goods relating to
Consultancy services
Marketing and promotion
Services rendered for administrative operations
HR, legal, accounting
2. Goods sold to persons or entities whose exemption from direct and indirect taxes
under special laws or international agreements
United Nations UN, ADB, IRRI, WHO
Asian Development Bank
International Rice Research Institute
unless:
World Health Organization
for unloading of cargoes/passengers
3. Transaction: Sale of goods, supplies, equipment and fuel
Buyer: to persons engaged in international shipping or air transport operations
Condition: shall be used to transport of goods and passengers from a port in the PH directly
to a foreign port, or vice versa, without docking or stopping at any other port in the PH

4. Those considered export sales under EO No. 226 or Omnibus Investment Code
a. sales to BOnded manufacturing warehouses of export-oriented
manufacturers
b. sales to DIplomatic missions and other agencies and/or
Under OIC: instrumentalities granted tax immunities whether paid for in foreign
"BoDieeS" currency or not
b. sales to registered Export traders operating bonded trading
warehouses supplying RMs in the manufacture of export products
d. sales to Export processing zones
e. sales to SBMA
 The sale and actual shipment of goods from PH to FC
5. Export sales Paid for in acceptable foreign currency
Accounted for in accordance with the rules and regulations of the BSP
Certificate of Inward Remittance (CIR) - the bank has received foreign
currency from a foreign buyer

To a non-resident buyer
6. Sale of RM or For delivery to a resident local export-oriented enterprise
packaging materials To be used in manufacturing, processing, packaging or repacking
in PH of the said buyer's goods paid for in acceptable foreign currency
Accounted for in accordance with the rules and regulations of the BSP

7. Sales to offshore gaming licensees subject to gaming tax

8. Sale of RM or packaging materials to export-oriented enterprise whose export sales
exceed 70% of total annual production

Kapag nasa labas ng PH, nirerequire ng batas na foreign currency, otherwise not required

Zero-rated sale of Services International Transport operations

Special laws
ItS ExPORTInGS Export oriented enterprise
Processing, manufacturing, or repacking goods
for persons doing business outside PH
1. Processing, manufacturing, or
Other services to persons engaged in business
repacking goods outside PH or non-resident in PH
-For other persons doing business outside PH Renewable energy
-Goods are subsequently exported Transport from PH to abroad
-Paid for in acceptable foreign currency International agreements
-Accounted for in accordance with the services to offshore Gaming operations
rules and regulations of the BSP Separate customs territory

2. Other services not mentioned rendered to:

-A person engaged in business conducted outside PH
-A non-resident person not engaged in business who is outside PH when
the services are performed
-Paid for in acceptable foreign currency and
-Accounted for in accordance with the rules and regulations of the BSP
Example: BPOs
 3. Services rendered to persons or entities whose exemption from direct and
indirect taxes under special laws or international agreements

"Effectively zero-rated sale"

UN, ADB, IRRI, WHO
bawal silang pasahan ng VAT

4. Sale of services to persons engaged in international shipping or international air

transport operations including leases of property for use thereof
international shipping or
Exclusive for
international air transport operations
5. Services performed by subcontractors and/or contractors in processing, converting
or manufacturing goods for an enterprise whose export sales exceed 70% of total
annual production
6. Transport of passengers and cargo by domestic air or sea vessels from PH to FC
7. Sale of power or fuel generated through renewable sources of energy

Renewable energy developers must provide DOE Certificate of Registration

and DOE Certificate of Endorsement to avail zero-rating

The tax exemptions and/or incentives shall be availed of by a registered RE Developer

of hybrid and cogeneration systems utilizing both RE sources and conventional energy
but only in proportionate and to the extent of the RE component
8. Services rendered to registered enterprises within a separate customs territory as
provided under Special Law
9. Services rendered to offshore gaming licensees subject to gaming tax

The successful establishment and implementation of an enhanced

Two conditions in VAT refund system that grants refunds of input tax within 90
TRAIN days from the filling of application with the BIR
All pending VAT refund claims as of 12/31/2017 shall be fully paid
in cash by 12/31/2019

In order for certain zero-rated transactions para maging 12% vat subject transactions

Satisfied? Yes. Certain transactions previously taxed at 0% VAT shall now be subject to 12%
But, RR No. 9-2021 "Deferred"
As of now, hindi pa lifted yung deferral so zero-rated pa rin silang lahat.

For CPALE purposes: zero-rated pa ang mga constructive exports

 Zero-rating vs. Exempt
In both instances of zero-rating, there is a total relief for the purchaser from
the burden of the tax. But in an exemption there is only partial relief, because
the purchaser is not allowed any tax refund of or credit of input taxes paid.

Illustation: Zero-rated Exempt

Output Vat 0 0
Input Vat (120,000) N/A
Vat Payable (120,000) 0
tax credit
Vat-Exempt Transactions
“pre, pre, pack”
Batch 1 AFFECT3D SA BONES preparation,
preservation,
packaging
Sale or importation of:
-Agricultural and marine food products in their original state
-livestock and poultry for human consumption
-breeding stock and genetic materials freezing, drying
salting, broiling
Also in original state:
does not include: roasting, smoking
C2ROP Mo stripping
CRAPZ fighting cocks
Corn grits
race horses
Copra muscovado sugar
aquarium fish
Raw cane sugar
pets
Ordinary salt
zoo animals
Polished and/or husked ice
Molasses
RMC No. 55-2014
Sale or importation of:
should be unfit for human consumption
-Fertilizers or that the ingredient cannot be used in
-seeds, seedlings and fingerlings the production of food for human
-fish, prawn, livestock, and consumption as certified by the FDA
-poultry feeds
including ingredients, whether locally produced or imported

Note: Specialty feeds for “CRAPZ” are subject to vat.

 Cooperative Development Authority
Cooperatives
-sales by agricultural cooperatives duly registered with the CDA to their members
-Sale of their produce whether in its original state or processed from, to non-members
-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

Product sold Members Non-Members

-Cooperative’s own produce Exempt Exempt
-Others Exempt Subject to VAT

-Gross receipts from lending activities by credit or multipurpose cooperatives duly

registered with the CDA
exemption is not only limited to the gross receipts on
loans extended to its members but also non-members
Threshold of 3,000,000
sale or lease of goods or properties or the performance of services other than the
transactions mentioned as exempt, the gross annual sales and/or receipts do not
exceed the threshold amount of P3M

including:
non-refundable advance deposits/payments for services
net of discounts, sales returns and allowances for CY
incidental sales

sale of
Drugs and medicines prescribed diabetes, high cholesterol and hypertension beg. Jan 01, 2019
plus cancer, mental illness, tuberculosis, kidney diseases beg Jan 01, 2021

CREATE Act [Covid 19 vat exemptions] duration: Jan 01, 2021 to Dec 31, 2023

-Drugs treatment of COVID-19 approved by FDA for use in clinical trials

-All drugs, vaccines, and medical devices specifically prescribed and directly used
for the treatment of Covid 19
-Sale and importation of capital equipment, its spare parts and raw materials,
necessary for the production of PPEs

DTI shall certify that such equipment, spare parts, or ram materials are not locally
available or insufficient in quantity, or not in accordance with the quality or
specification required
 Transactions which are exempt under international Agreements to which the Philippines is a
signatory or under Special laws
UN, ADB, IRRI, WHO Zero rated - Purchaser
Exempt - Seller

Sale, importation, printing or publication of

covered by UNESCO
Books and
Any newspaper, magazine, journal, review or bulletin, or any reading material

including digital and electronic format

Requisites: with fixed prices for subscription and

Philippine Daily Inquirer sale not devoted principally to the publication of paid ads
appears at regular intervals

Solo parents Milk

10% discount
Benefits: Products: Food and micronutrient supplements
VAT exemption Medicines, vaccines and other medical
supplements
Qualification: Sanitary diapers
-Purchased from birth of the child until 6 years
RR of
13-age
-Solo parent earning <250,000 annually 2018

Batch 2 FEVER
importation of fuel, goods and supplies by persons engaged in international shipping or
air transport operations

Note: walang zero-rated sa Importation. Either 12% Vat or Exempt

Export sales by persons who are not VAT-registered

Sale, importation or lease of passenger or cargo vessels and aircraft for

domestic or international transport operations

including engine, equipment and spare parts

subject to the requirements and restriction on vessel importation
mandatory vessel retirement program of MARINA
 sale of real property not primarily held for sale to customers or
Real not primarily held for lease in the OCB
Property utilized for low-cost and socialized housing as defined by RA 7279
and other related laws
price ceiling per unit is P450,000 or as determined by
HUDCC and the BEDA pr other related laws

sale of “House and Lot and other residential dwellings” with selling
price of not more than P3,199,200
increased to P4.2M was
vetoed by then Pres Duterte

RR 13- Train, RR 4- RR 8-
Train Create 2021
2018 2021 2021

Residential lot 1.5M 1,919,500 VAT subj 2.5M Vat subj Vat subj
Resi House & lot 2.5M 3,199,200 2M 4.2M 2M 3,199,200

two adjacent house & lot or other residential dwellings

IF: in favor of one buyer
from the same seller presumed as a sale of one residential House
and Lot or residential dwelling

Condo unit not exceeding 3,199,200 - exempt from VAT

Condo unit + parking
included in determining if exceeding threshold? NO. Exclude.

Parking lot - always subject to VAT regardless of amount of selling price

Batch 3 GOD COMES

sale of gold to the BSP beg January 01, 2018 or upon effectivity of
RA10963 - TRAIN Law (new provision)

sale or lease of goods to persons with disability (RA 10754)

sale by non-agricultural, non-electric and non-credit cooperatives registered with CDA

share capital contribution of each member does not exceed P15,000

regardless of the aggregate capital and net surplus ratably distributed
among the members
 Importation by non-agricultural, non-electric and non-credit cooperatives
of machineries and equipment including spare parts
Subject to VAT

transfer of property through merger and consolidation

sale or lease of good to senior citizens (RA 9994)

Note: Qualified national athletes and coaches are entitled to 20% discount
but shall not enjoy VAT exemption

exempt services
Batch 4 PASS DAMI BEER

services subject to Percentage tax hiwalay palagi ang coverage ng percentage tax
at VAT. Walang instance na sabay except one
1. 3% (1%) percentage tax (OPT)
2. Common carrier's tax non-vat registered but
3. International Common carrier's tax issued a vat official receipt
4. Franchise tax
5. Overseas communication tax
6. Gross receipts tax for banks and financial intermediaries
7. Premium tax on life insurance
8. Amusement tax
9. Tax on winnings
10. Initial public offering tax
11. Stock transaction tax

Association dues, membership fees, and other assessments and charges

Collected by: Homeowners association
RA 9904 - Magna Carta for
Condominium corporations
Homeowners’ association
RA 4726 - Condominium Act

sale or lease of services to senior citizens, persons with disability

 Services by agricultural contract growers and milling for others of:
palay into rice
corn into grits
sugar cane into raw sugar
contract for a package of receiving eggs from breeder farm
sorting
fumigating
setting
hatching
sexing of day-old broilers
sorting and delivering then to contract grower

medical, dental, hospital and veterinary services except those rendered by professionals
Note:
-laboratory services are exempted. If the hospital or clinic operates a pharmacy or
drugstore, the sale of drugs and medicines are subject to vat.
-hospital bills constitute medical services. Sales made the drugstore to the in-patients
which are included in the hospital bills are part of medical bills (not subject to vat)
-sales of the drug store to the out-patients are taxable because they are not part of
medical services of the hospital
-HMOs are subject to vat unless they directly provide medical services
to their client

Medical practitioners
occupational/physical/speech therapists
medical technologists
nurses, etc
allied health workers
other medical practitioners who are not under an employer-
employee relationship with the hospital, clinic or HMO

Professional practitioners are subject to vat if annual gross professional

fees exceed P3,000,000. Otherwise, subject to Percentage tax

Medical practitioners
CPAs
Insurance Agents (Lige and Non-life)

Transport of passengers by international carriers

not subject to OPT and transport of cargo by international carriers

doing business in the PH as the same is subject to CCT
 International carriers (resident foreign corporations)
Transport of Originating in the Philippines
Passengers Vat exempt
Cargo or goods subject to common carrier’s tac (CCT)

Domestic Common carriers

Transport of Within the PH PH to abroad
Passengers:
By land CCT 0% Vat
By air or sea Vat 0% Vat
Cargo/goods or mails Vat 0% Vat

subject to percentage tax

services of bank, non-bank financial intermediaries
performing quasi-banking functions, and money changers
other non-bank financial intermediaries pawnshops

BSP:
-its activities or transactions in the exercise of its supervision over the operations of banks
-in pursuit of its primary objective to maintain price stability, and the convertibility of peso

educational services rendered by DepEd

a. private educational institutions duly accredited by CHED
b. Government Educational Institutions TESDA
State Universities and Colleges

all revenues and assets of non-stock, non-profit educational institutions used actually,
directly and exclusively for educational purposes shall be exempt to taxes and duties.

It’s the used not the source that matters

services rendered by individuals pursuant to an employer-employee relationship

services rendered by regional or area headquarters established in the PH by
multinational corporations
act as supervisory, communications and coordinating centers for their
affiliates or subsidiaries or branches in the Asia Pacific Region and
do not earn or derive income from the PH
 Batch 5 PROPER REST
professional instruments and implements, tools of trade, occupation
importation of or employment, wearing apparel, domestic animals, and
personal household effects
belonging to:
-persons coming to settle in the PH or
-Filipinos or their families and descendants who are now residents or citizens of other
countries, referred to as overseas Filipinos
-in quantities and of the class suitable to the profession, rank or position of the
persons importing the said items
-for their own use and not for barter or sale
-accompanying such persons, or arriving within a reasonable time

lease of a residential unit with a monthly rental not exceeding P15,000

regardless of the amounts of aggregated rentals received by the lessor during the year

any person who is vat exempt or not required to

Optional Vat Payment register for vat may elect to be vat-registered

irrevocable for 3 years from the quarter the election was made

Franchise grantees of radio and/or television broadcasting whose annual gross receipts
of the preceding year do not exceed P10,000,000 derived from the business covered
by the law granting the franchise may opt for vat registration
once exercised, shall be irrevocable

Application period: not later than ten (10) days before beginning of the calendar
quarter and shall pay the registration fee unless paid at the
beginning of the year

CIR may, for administrative reason deny any application for registration

Once registered as vat person, the taxpayer shall be liable to

output tax and be entitled to input tax credit beginning on
the first day of the month following registration.
 Input Vat Proper claiming of input vat
to vat-registered person
Transaction
Requisites: Registration
TRIAD In the course of his trade business
Attribution
Documentation sales invoice - goods
official receipt - services
The input tax on domestic
to the purchaser upon consummation of sale and on
purchases or importation of
importation of goods and properties and
goods and properties by a
to the importer upon payment of the vat prior to the
vat-registered person shall
release of the goods from the custody of the BOC
be creditable

Only vat-registered person can claim input tax credits.

Examples:

Purchase or importation of goods

-for sale
-for conversion into or intended to form part of a finished product for sale including
packaging materials
-for use as supplies in the course of business
-for use as materials supplied in the sale of service
-for use in trade or business for which deduction for depreciation or amortization is
allowed under the Tax Code

Purchase of services on which a value-added tax has actually been paid

Documentation
import entry or other equivalent document showing
Importation of goods
actual payment of vat on the imported goods

Purchase of goods & poperties invoice

Purchase of Real property Public instrument i.e., deed of absolute sale, deed
of conditional sale, contract/agreement to sell, etc.
together with vat invoice issued by the seller

Purchase of services official receipt

Rules on Timing of Input Vat

Transaction Timing
Importation Payment of vat prior to release of goods from customs custody
domestic goods or
properties Upon consummation of sale
purchase of services Upon payment
Lease of properties Upon payment
Real properties Upon payment

Special Rules on Input Vat

goods or properties with estimated useful life of more
Input Vat on Capital Goods than 1 year and which are treated as depreciable
assets, used directly or indirectly in the production or
sale of taxable goods and services

the aggregate acquisition cost for depreciable capital goods,

Requisites:
excluding the vat, exceeds P1,000,000
in one calendar month
useful life or 60 months,
Effect: spread evenly over useful life whichever is shorter

Value in one month

Useful life greater than P1M less than P1M

5 years or more spread for 60 months

greater than 1 year, spread evenly throughout

less than 5 years the useful life full input vat on month
of acquisition
less than 1 year full input vat on acquisition
month

amortization of input vat shall be allowed until December 31, 2021

cut-off of purchases not the amortization of input vat

taxpayers with unutilized input vat on capital goods shall be allowed to apply
the same as scheduled until fully utilized
 Input Vat on Vehicles only one (1) vehicle for land transport is allowed for the use of
an official or employee, value not exceeding P2,400,000
unless main line of business is transport operations or lease of transportation
equipment and the vehicles purchased are used in said operations

Construction in Progress considered as a purchase of service, the value of which shall

be determined based on the progress billings

where only the labor will be labor - on the month the payment was
supplied by the contractor and the made based on a progress billings
materials will be purchased by the materials - at the time the materials
contractee from other suppliers: were purchased

Special Forms of Input Vat

Transitional input vat taxpayers who becomes liable for vat for the first time and
WHO: taxpayers who elect to be vat registered

Beginning Inventory PXX Actual input vat on

Rate 2% beginning inventory PXX
XX
Transitional Input Vat
whichever is higher

-include all inventories related to business whether purchased from vat or non-vat supplier
-beginning inventory of capital goods shall be excluded for purposes of determining
transitional input vat
sardines
Presumptive input vat mackerel
milk
WHO: SaMaMiCoPaRe cooking oil
persons or firms engage in the packed noodle-based instant meals
processing or manufacturing refined sugar
pasteurization, canning and activities
which through physical or chemical Purchases of primary agricultural
processes alter the exterior texture or products used as inputs PXX
form or inner substance of a product in Vat rate 4%
such manner as to prepare it for special
use to which it could not have been put
Presumptive input vat PXX
in its original form or condition.
 Standard Input Vat as of now, wala na ito. so, fyi
No longer applicable pursuant to RMC No. 36-2021 in relation to RR No. 13-2018
Effective: January 01, 2021

What: Sales to the Government

Rate: 7% of the selling price
-Should the actual input vat attributable to sales to Government exceeds 7% of gross
payments, the excess may form part of the sellers’ expense or cost
-If less than 7% of gross payment, the difference may be closed to expense or cost.
(Deduction from expense or cost)

Withholding Vat

lease or use of properties or property rights owned by non-residents

other services by non-residents
Example:
Gross: 1,200,000 lease payment to NR with a property in the PH
Lessor will withhold the 120,000 VAT and remit to the BIR

Monthly Remittance Return of VAT Withheld

BIR Form 1600-VT Deadline: 10th day of the following month

BIR Form 2306 Certificate of Final Tax and VAT Withheld at Source
Deadline: on or before January 31 the following year or upon request
BIR Forms starting at “23” are certificates

Substituted Vat Return

waiver of the privilege to claim input tax credits
the seller has to execute notice to the BIR of availment of the option to pay taxes
through the withholding process

sales to Government -5% Creditable Withholding Vat beginning January 01, 2021

Output 120,000
Purchase Sale Government Input (96,00)
P800,000 1,000,000 1,000,000 24,000
96,000 120,000 CWV (50,000
896,000 1,120,000 (26,000)
actual input vat (50,000) creditable withholding vat
1,070,000 tax credit
payable to seller
 Administrative Requirements
vat invoice for every sale , barter or
Invoicing Requirements exchange of good or property
a vat registered person shall issue: vat official receipt for every lease of goods
or properties and for every sale, barter or
exchange of services
contents:
1. a statement that the seller is a vat-registered person, followed by his TIN
2. the total amount which the purchaser pays or is obligated to pay to the seller with
the indication that such amount includes the vat
a. the amount of tax shall be shown separately
b. ‘vat-exempt sale'
c. ‘zero-rated sale” shall be written or printed prominently
3. date of transaction, quantity, unit cost and description
4. in the case of sales in the amount of P1,000 or more where the sale or transfer is
made to a vat-registered person name
business style, if any
address
Validity of ATP TIN

The five year validity period of the PTU and/or system-generated

receipts/invoices are removed.
The phrase “This invoice/receipt shall be valid for five (5) years from the date of ATP/
PTU” shall be omitted and disregarded.

Issuing erroneous VAT Invoice/OR

If a person who is not a vat-registered person issues an invoice or receipt showing his
TIN, followed by the word ‘Vat’:
-the issuer shall, in addition to any liability to OPT, be liable to:
a. the output vat without the benefit of any input tax credit and
b. 50% surcharge
-the vat shall, if the other requisite information required is shown on the invoice or
receipt, be recognized as an input tax credit to the purchaser

If a vat-registered person issues a vat invoice or vat OR for a vat exempt transaction,
but fails to display prominently on the invoice or receipt the term ‘Vat exempt sale’, the
issuer shall be liable to account for output tax
 BIR Form 2550M
Vat Returns and Payment of Vat BIR Form 2550Q

Prior to January 01, 2023 - Monthly and Quarterly Filing/Payment

Monthly Vat declaration: 20th day of the following month except
eFPS filers: 21st to 25th day of the following month
Quarterly Vat Return: 25 days following the close of the taxable quarter

Beginning January 01, 2023 - Quarterly Filing/Payment

Filing and payment shall be done within twenty-five (25) days
following the close of each taxable quarter
but optional filing of monthly vat return and payment of monthly vat due under
RMC 52-2023 dated and effective May 10, 2023

Due date? No due date.

Penalty from switching to monthly filing to quarterly filing of vat
return and vice versa: No penalty shall be imposed.

Special deadline: Cancellation of registration

25 days from the date of cancellation

For taxpayer with multiple branches: only one consolidated return shall be filed by the
taxpayer for his principal place of business or head office of all branches

Summary List of Sales (SLS)

Attachment to 2550-Q Summary List of Purchases (SLP)
Summary List of Importation (SLI)

Short Period Return

any person who retires from business and whose vat registration has been
cancelled shall file a final quarterly return and pay the tax due thereon
within 25 days from the end of the month when the business ceases to
operate or when the vat registration has been officially cancelled.

If the effective date of registration falls on the 1st 2nd month of the
taxable quarter, the initial monthly vat declaration shall be filed within 20
days after the end of the month
 Required to Register

-Gross sales or receipts (GSR) for the past 12 months, other than those that are
exempt have exceeded P3,00,000
-There are reasonable grounds to believe that his GSR for the next 12 months, other
than those that are exempt, will exceed P3,000,000

Failure to register: liable to pay the tax, as if he were a vat-registered person but
without the benefit of input tax credits for the period in which he was not properly
registered

Optional registration: Any person not required to register for vat

cannot cancel registration for the next three (3) years

12% Vat
vat subject exceeds P3M - mandatory
RIT/RCIT
annual gross
sales/receipts less than P3M - optional
8% income tax option 3% OPT 12% Vat
No Vat/OPT 3% OPT 12% Vat
8% IT RIT/RCIT RIT/RCIT

Cancellation of Vat Registration

1. written application and can demonstrate to the commissioner’s satisfaction that his
gross sales or receipts the following twelve (12) months, other than those that are
exempt, will not exceed P3,000,000
2. If he has ceased to carry his trade or business, and does not expect to
recommence any trade or business within the next twelve (12) months

the cancellation for registration will be effective from the first

day of the following month the cancellation was approved.
3. Power of the Commissioner to suspend business operations
the CIR or his authorized representatative may order suspension or closure of business
establishment for a period of not less than 5 days or any of the following violations:
-failure to issure receipt or invoices
-failure to file vat return
-understatement of taxable sales or receipts by 30% or more of the correct taxable
sales or receipts for the taxable quarter
-failure of any person to register as required under the law