VALUE ADDED TAX

SEC 105 TO SEC 115 OF

THE NATIONAL
INTERNAL REVENUE
CODE OF 1997
As amended by:
RA No. 10963 (TRAIN)
RA No. 11256
RA No. 11346
RA No. 11467
RA No. 11534 (CREATE)

© John Steven Alburo, CPA

AGENDA

• Who is liable to pay VAT • Question and Feedbacks

• VAT on Sale of Goods • Sample problem
• VAT on Sale of Services
• Tax base and Tax Rates
• Other VAT Topics
• VAT Computation
• Administrative and Filing
Requirements

2
© John Steven Alburo, CPA
WHO IS LIABLE?
Any person who, in the course of trade or business, sells
barters, exchanges, leases goods or properties, renders
services, and any person who imports goods shall be
subject to the value-added tax (VAT) imposed in Sections
106 to 108 of this Code.

The value-added tax is an indirect tax, and the amount of

tax may be shifted or passed on to the buyer, transferee or
lessee of the goods, properties or services.

The phrase “in the course of trade or business” means the

regular conduct or pursuit of a commercial or an economic
activity, including transactions incidental thereto, by any
person regardless of whether or not the person engaged
therein is a non-stock, nonprofit private organization, or
government entity.

© John Steven Alburo, CPA

WHEN YOU ARE LIABLE?
Any person who are VAT registered or has 3 million in gross
sale or gross receipts for a taxable year.

Provided that:
a. You are not engaged in business subject to other
percentage tax
b. You are not engaged in vat exempt transaction as
provided by the tax code

© John Steven Alburo, CPA

VALUE ADDED TAX
ON SALE OF GOODS
OR PROPERTIES
There shall be levied, assessed and collected on every sale,
barter or exchange of goods or properties, value-added tax
equivalent to twelve percent (12%).
The term “goods” or “properties“ shall mean all tangible and
intangible objects which are capable of pecuniary estimation
and shall include
1. Real properties held primarily for sale to customers or held
for lease in the ordinary course of trade or business
2. The right or the privilege to use patent, copyright, design or
model, plan, secret formula or process, goodwill, trademark,
trade brand or other like property or right
3. The right or the privilege to use in the Philippines of any
industrial, commercial or scientific equipment
4. The right or the privilege to use motion picture films, tapes
and discs
5. Radio, television, satellite transmission and cable television
time
© John Steven Alburo, CPA
VALUE ADDED TAX ON
SALE OF SERVICES AND
USE OF PROPERTIES
There shall be levied, assessed and collected, a value-added tax
equivalent to twelve percent (12%) of the gross sales derived
from the sale or exchange of services, including the use or lease
of properties.
The phrase “sale or exchange of services” means the
performance of all kinds of services in the Philippines for others
for a fee, remuneration or consideration, including those
performed or rendered by construction and service
contractors... (please see SEC 108)

© John Steven Alburo, CPA

VAT ZERO RATING OR
THE 0% VAT (GOODS)
• Export Sales
1. The sale and actual shipment of goods from the Philippines to a foreign country,
irrespective of any shipping arrangement that may be agreed upon which may
influence or determine the transfer of ownership of the goods so exported and paid for
in acceptable foreign currency or its equivalent in goods or services, and accounted for
in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)
2. Sale and delivery of goods to (a) Registered enterprises within a separate customs
territory as provided under special laws and (b) Registered enterprises within tourism
enterprises zones as declared by the Tourism Infrastructure and Enterprise Zone
Authority(TIEZA).
3. Sale of raw materials or packaging materials to a nonresident buyer for delivery to a
resident local export-oriented enterprise to be used in manufacturing, processing,
packing or repacking in the Philippines of the said buyer's goods and paid for in
acceptable foreign currency and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP)
4. Sale of raw materials or packaging materials to export-oriented enterprise whose export
sales exceed seventy percent (70%) of total annual production
5. For other items refer to Sec 106 (A)(2)(a) of the tax code.

© John Steven Alburo, CPA

VAT ZERO RATING OR
THE 0% VAT
(SERVICES)
1. Processing, manufacturing or repacking goods for other persons doing business outside the
Philippines which goods are subsequently exported, where the services are paid for in
acceptable foreign currency and accounted for in accordance with the rules and regulations
of the Bangko Sentral ng Pilipinas (BSP)
2. Services other than those mentioned in the preceding paragraph, rendered to a person
engaged in business conducted outside the Philippines or to a nonresident person not
engaged in business who is outside the Philippines when the services are performed, the
consideration for which is paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)
3. Services rendered to persons or entities whose exemption under special laws or international
agreements to which the Philippines is a signatory effectively subjects the supply of such
services to zero percent (0%) rate
4. Services rendered to persons engaged in international shipping or international air transport
operations, including leases of property for use thereof: Provided, That these services shall be
exclusive for international shipping or air transport operations
5. Services performed by subcontractors and/or contractors in processing, converting, or
manufacturing goods for an enterprise whose export sales exceed seventy percent (70%) of
total annual production
6. for more items refer to Sec 108 (b) of the Tax Code

© John Steven Alburo, CPA

EXEMPT TRANSACTIONS
1. Sale or importation of agricultural and marine food products in their original state,
livestock and poultry of or king generally used as, or yielding or producing foods
for human consumption; and breeding stock and genetic materials therefor.
(keyword is “in original state”)
2. 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
race horses, fighting cocks, aquarium fish, zoo animals and other animals
generally considered as pets);
3. Importation of personal and household effects belonging to the residents of the
Philippines returning from abroad and nonresident citizens coming to resettle in
the Philippines: Provided, That such goods are exempt from customs duties
under the Tariff and Customs Code of the Philippines
4. Services subject to percentage tax under Title V
5. For more items refer to Sec 109 of the tax code

© John Steven Alburo, CPA

WHAT IS THE TAX BASE?

Gross sales – this term shall mean the total amount of money or its
equivalent value in money which the purchaser pays or is obligated to
pay to the seller in consideration of the sale, barter or exchange of the
goods or properties, excluding the value-added tax. The excise tax, if
any, on such goods or properties shall form part of the gross sales.

Sales Returns, Allowances and Sales Discounts – allowed as long as it is

indicated in the invoice at the time of sale and the grant of which does
not depend upon the happening of a future event may be excluded
from the gross sales within the same quarter it was given

10
© John Steven Alburo, CPA
OTHER VAT TOPICS
Transaction deemed as sale
• Transfer, use or consumption not in
the course of business of goods or
properties originally intended for sale
or for use in the course of business
• Distribution or transfer to (a) • Transitional Input Tax – related to
shareholder or investor as share in inventory valuation change (2% on
profits of the VAT-registered persons taxpayer’s ending inventory)
or (b) creditors in payment of debt
• Presumptive Input Tax – Person’s
• Consignment of goods if actual sale engaged in the processing of
is not made within sixty (60) days sardines, refined sugar, mackerel and
following the date such goods were
consigned others – 4% of the gross value in
money of their purchase of these raw
• Retirement from or cessation of materials.
business, with respect to inventories
of taxable goods existing as of such
retirement or cessation
11
© John Steven Alburo, CPA
VAT COMPUTATION (RETURN)

12
© John Steven Alburo, CPA
 ADMINISTRATIVE AND FILING
REQUIREMENTS
Invoicing Requirements - A VAT-registered person shall issue
a VAT invoice for every sale, barter, exchange, or lease of goods
or properties and for every sale, barter or exchange of services.

Note: Per EOPT – sales invoice for both service and goods. No
other document is required.

Accounting Requirements – Taxpayer should maintain a

subsidiary journal for its sales and purchase transactions.

13

© John Steven Alburo, CPA

 ADMINISTRATIVE AND FILING
REQUIREMENTS
Information in the sales invoice:
1. A statement that the seller is a VAT-registered person,
followed by the seller's Taxpayer's Identification Number

2. Breakdown of the amount the purchaser paid

3. The date of the transaction, quantity, unit cost and description
of the service or goods

4. If the transaction is equal or more than 1k, the information of

the purchaser should be presented. (Name, Address, and TIN)

14

© John Steven Alburo, CPA

 ADMINISTRATIVE AND
FILING REQUIREMENTS
When to file?

Every 25th day after the close of the quarter

Where to file and pay?

Either electronically (EFPS) or manually (eBIR).

Shall be paid with any authorized agent bank
or Revenue District Office. (Per EOPT)

15

© John Steven Alburo, CPA

THANK YOU
JOHN STEVEN P. ALBURO
0917-301-8230
[email protected]

© John Steven Alburo, CPA