EXEMPTIONS ON VAT

• Sale or importation of agricultural and marine food products in their original state


  • Agricultural and marine food products
  • Livestock or poultry of a kind generally used as or yielding or producing foods for human consumption
  • Breeding stock and genetic materials therefor
• Original state


  • Freezing
  • Drying
  • Salting
  • Broiling
  • Roasting
  • Smoking
  • Stripping, including those using advanced technological means of packaging such as shrink wrapping in plastics, vacuum packing, tetra-pack, and other similar packaging methods
  • Polished and/or husked rice, corn grits, raw cane sugar and molasses, ordinary salt, and copra
• Livestock or Poultry that are not included(VATABLE)


  • Fighting cocks
  • Racehorses
  • Zoo animals
  • Other animals generally considered as pets
• Sale of bagasse is (VATABLE)
• Fresh water is not an agricultural product but is considered a mineral, and the sale thereof is (VATABLE)
• Sale or importation of


  • Fertilizers
  • Seeds, seedlings, and fingerlings
  • Fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds for racehorses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets)
• Importation of personal and household effects belonging to the residents of the Philippines returning from abroad, and non-resident citizens coming to the Philippines, provided that such goods are exempt from Philippine customs duties
• Importation of


  • Professional instruments and implements
  • Tools of trade, occupation, or employment
  • Wearing apparel
  • Domestic animals
  • Personal household effects
• Except any vehicle, aircraft, machinery, and other goods for use in the manufacture and merchandise of any kind in commercial quantities, belonging to overseas Filipinos, in quantities and of the class suitable to the profession, rank, or position of the persons importing said items, for their own use and not for sale, barter, or exchange, accompanying such persons, or arriving within a reasonable time (VATABLE)
• Services subject to percentage tax under Title 5 of the Tax Code
• Services exempt from VAT


  • Agricultural contract growers
  • Milling for others of palay into rice, corn into grits, and sugar cane into raw sugar
  • Medical services
  • Dental services
  • Hospital services
  • Veterinary services except those rendered by professionals
  • Lab services
  • Sale of drugs and medicines to in-patients
• Sale of drugs and medicines by hospital or clinic drug store is GENERALLY subject to VAT
• Educational services exempt from VAT


  • Rendered by private educational institutions duly accredited by DepEd, CHED, TESDA
  • Rendered by government educational institutions
• Services rendered by individuals

  Pursuant to an employer-employee relationship
• Services rendered by regional or area headquarters (RHQs)


  Established in the Philippines by multinational corporations which act as supervisory, communications, and coordinating centers for their affiliates, subsidiaries, or branches in the Asia-Pacific Region, and do not earn or derive income from the Philippines
• Transactions which are exempt

  Under international agreements to which the Philippines is a signatory or under special laws, except those under PD 529
• Sales by agricultural cooperatives

  Duly registered with and in good standing with the Cooperative Development Authority (CDA) to their members as well as sale of their produce, whether in its original state or processed form, to non-members; and their 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
• Gross receipts from lending activities


  By credit or multi-purpose cooperatives duly registered with and in good standing with the Cooperative Development Authority
• Sales by non-agricultural, non-electric, and non-credit cooperatives


  Duly registered with and in good standing with the Cooperative Development Authority (CDA)
• Conditions for non-agricultural, non-electric, and non-credit cooperatives


  • Share capital contribution of each member does not exceed (15,000)
  • Importation of machineries and equipment, including spare parts thereof to be used by them are subject to VAT
• Conditions for electric cooperatives


  • Registered with the National Electrification Administration (NEA)
  • Subject to VAT on sales relative to the generation and distribution of electricity as well as their importation of machinery and equipment, including spare parts
  • Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels, shall be subject to 0% VAT