VALUE ADDED TAX

• VAT is a tax on consumption levied on the sale, barter, exchange, or lease of goods or properties and services in the Philippines and on importation of goods into the Philippines
• VAT on sales is required by law to be included in the price of the goods as a top-up thereto
• The amount of VAT is explicitly disclosed in the invoice or official receipt of the seller
• VAT on sales shall be reduced by the amount of VAT paid by the business on its purchases
• The seller is usually liable for the payment of VAT, but the amount of tax may be shifted to the buyer, transferee, or lessee of goods, properties, or services
• Mandatory VAT registration is required when gross sales/gross receipts for the past 12 months exceed the 3M VAT threshold or there are reasonable grounds to believe that gross sales/gross receipts for the next 12 months will exceed 3M
• Optional VAT registration is available when gross sales/gross receipts do not exceed the 3M VAT threshold
• Mandatory VAT registered taxpayers who did not exceed the threshold for the current year may opt to change into Non-VAT registration in the succeeding year
• Exempt from VAT franchise grantees who opt to be VAT registered cannot change to Non-VAT registration for the next 3 years
• Persons with Disability who have long-term impairments are eligible for a 20% discount on qualified goods
• National athletes, coaches, and trainers recognized by the Philippine Olympic Committee and the Philippine Sports Commission are eligible for a 20% discount on qualified goods
• Senior citizens who are residents of the Philippines and are sixty years old and above are eligible for a 20% discount on qualified goods
• Basic necessities and prime commodities are eligible for a 5% special discount for Senior Citizens and Persons with Disability
• Compute the discount and the amount to be paid by Hidilyn if the seller is VAT-registered
• Compute the discount and the amount to be paid by Hidilyn if the seller is non-VAT registered and percentage tax due
• Presentation of ID for availment of discounts:

  • Senior citizen: ID issued by Office of Senior citizen’s Affairs (OSCA) in the city or municipality where the elderly resides, or Philippine passport or any government issued ID
  • PWD: ID issued by the Office of the Persons with Disability Affairs (PDAO) or CSWD/MSWD where the PWD resides
  • National Athletes and coach: Philippine National sports team Identification card and booklet issued by the chairman of the Philippine Sports Commission (PSC)
  • Solo parent ID
• Keeping of separate books of accounts:

  • Recording of names and ID number, sales discount granted, date of transactions and invoice number every sales transactions
  • If book has no record of such, the discounts will be disallowed as an expense
  • Required subsidiary books of accounts: Senior citizen’s book, Person with disability book, Records of sales for national athletes and coaches
• Qualified goods for 10% Discount for Solo Parents (earning less than Php250,000 annually):

  • Baby’s milk
  • Food and micro-nutrient supplements
  • Sanitary diapers
  • Duly prescribed medicines
  • Vaccines
  • Other medical supplements purchased from the birth of child/children until 6 years of age
• Sales subject to 12% VAT:

  • Regular sales: Domestic sale, transfer, barter or exchange of goods or services
  • Deemed (constructive) sales: Transfer of goods originally intended for sale but not in the course of business
• Zero-rated sales/receipts:

  • No VAT shall be imposed on goods destined for consumption outside the Philippines
  • Actual export of goods and services from the Philippines to a foreign country must be free of VAT
  • Zero-rate sale is a taxable transaction but shall not result in any output tax
  • The treatment of input tax on purchase of goods, properties or services attributable to zero-rated sale shall be available as tax credit or refund
• VAT exempt transactions:

  • Agricultural and marine food products in their original state
  • Livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption
  • Breeding stock and genetic materials
  • Meat, fruit, vegetables
• VAT exempt transactions:

  • Fertilizers, seeds, seedlings and fingerlings
  • Feeds not fit for human consumption as certified by Bureau of Animal Industry
  • Importation of personal and household effects belonging to residents of the Philippines returning from abroad or non-residing citizen coming to resettle in the Philippines
  • Importation of professional instruments and implements, tools of trade, occupation or employment, wearing apparel, domestic animals, and personal household effects belonging to person coming to settle in the Philippines
• VAT exempt transactions:

  • Services to person subject to percentage tax under Title V of the Tax Code
  • Medical, dental, hospital, and veterinary services, except those rendered by professionals
  • Educational services rendered by private educational institutions duly accredited by Department of Education, Commission on Higher Education, Technical Education and skills Development Authority
  • Services rendered by individuals pursuant to an employer-employee relationship
  • Sales by agricultural cooperative duly registered with Cooperative Development Authority
• Agricultural Cooperative:

  • Sale to members: Exempt
  • Sale to non-members:
  • Producer: Exempt
  • Non-producer (Trader): 12% VAT
  • Sale of agricultural food products in original state is exempt