VALUE-ADDED TAX

DESCRIPTION
Value-Added Tax is a form of sales tax. It is a tax on consumption levied on the sale of goods
and services and on the imports of goods into the Philippines. It is an indirect tax, which can be
passed on to the buyer.
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WHO ARE REQUIRED TO FILE VAT RETURNS

Every person or entity who in the course of his trade or business, sells or leases goods, properties
and services subject to VAT, if the aggregate amount of actual gross sales or receipts exceed Five
Hundred Fifty Thousand Pesos (P 550,000.00) for any twelve month period
A person required to register as VAT taxpayer but failed to register
A person who imports goods
Professional practitioners
Professional Practitioners (PPs) are formerly classified as non-VAT taxpayers and were exempt
from the Value-Added Tax and Percentage taxes under Section 109 of the National Internal
Revenue Code (hereinafter referred to as the Code), until December 31, 2002. Prior to this date,
they were subject only to Income Tax under Section 24 of the Code.
Effective January 1, 2003, however, by virtue of Republic Act Nos. 7716 and 9010, which were
implemented by Revenue Regulation Nos. 1-2003 and 3-2003, services of PPs are also subject to
either VAT (if gross professional fees exceed P 550,000.00 for a 12-month period) or 3%
Percentage Tax (if gross professional fees totals P 550,000 and below for a 12-month period),
depending on their gross professional fee for a twelve (12) - month period.
"Professional Practitioners" include the following:
Certified Public Accountants
Lawyers
Doctors
Insurance Agents (Life & Non-life)
Other Professional Practitioners required to pass the government examination
Others

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Monthly VAT Declarations

Tax Form
BIR Form 2550 M - Monthly VAT Declarations

Documentary Requirements
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if applicable
2. Duly approved Tax Debit Memo, if applicable
3. Duly approved Tax Compliance Certificate, if applicable
4. Previously filed return and proof of payment, for amended return
Procedures
1. Fill-up BIR Form 2550 M in triplicate copies.
2. If there is payment:
Proceed to the nearest Authorized Agents Banks (AAB's) of the Revenue District Office where
you are required to register and present the duly accomplished BIR Form 2550 M, together with
the required attachments and your payment.
In places where there are no AAB's, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where you
are required to register and present the duly accomplished BIR Form 2550 M, together with the
required attachments and your payment.
Receive your copy of the duly stamped and validated form from the teller of the
AAB's/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. If there is no payment:
Proceed to the Revenue District Office where you are required to register and present the duly
accomplished BIR Form 2550 M, together with the required attachments.
Receive your copy of the duly stamped and validated form from the RDO representative
Deadline
Manual Filing
Not later than the 20th day following the end of each month
Filing Through eFPS

Group A - within twenty five (25) days following the end of the month
Group B - within twenty four (24) days following the end of the month
Group C - within twenty three (23) days following the end of the month
Group D - within twenty two (22) days following the end of the month
Group D - within twenty one (21) days following the end of the month

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Quarterly VAT Returns

Tax Form
BIR Form 2550 Q - Quarterly VAT Returns
Documentary Requirements
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if applicable
2. Duly approved Tax Debit Memo, if applicable
3. Duly approved Tax Compliance Certificate, if applicable
4. Previously filed return and proof of payment, for amended return
5. Summary List of Sales (if quarterly total Sales/Receipts (net of VAT) exceeds P 2,500,000)
with the following information:
a) BIR-registered name of the buyer who is engaged in business/exercise of profession;
b) Taxpayer Identification Number (TIN) of the buyer (Only for sales that are subject to VAT);
c) Exempt Sales;
d) Zero-rates Sales;
e) Sales subject to VAT (exclusive of VAT); and
f) Output Tax (VAT on Sales)
6. Summary List of Purchases (if quarterly total purchases (net of VAT) exceeds P 1,000,000)
with the following information:
a) BIR-registered name of the seller/supplier/service-provider;
b) Address of seller/supplier/service-provider;
c) Taxpayer Identification Number (TIN) of seller/supplier/service-provider
d) Exempt purchases;
e) Zero-rated purchases;

f) Purchases subject to VAT (exclusive of VAT) - on services;

g) Purchases subject to VAT (exclusive of VAT) - on capital goods;
h) Purchases subject to VAT (exclusive of VAT) - on goods other than capital goods
i) Creditable Input Tax
j) Non-creditable Input Tax
NOTE: Creditable input taxes and non-creditable input taxes are to be computed not on a per
supplier basis but on a per month basis.
7. The Quarterly Summary List of Importation with the following information:
a) Import Entry Declaration;
b) Assessment/Release Date;
c) Date of Importation;
d) Name of the Seller;
e) Country of Origin;
f) Dutiable Value;
g) All Charges Before Release from Customs Custody;
h) Landed Cost:
i) Exempt
j) Taxable (Subject to VAT)
k) VAT paid;
l) Official Receipt (OR) Number of the Official Receipt evidencing payment of tax; and
m) Date of VAT payment
Procedures
1. Fill-up BIR Form 2550 Q in triplicate copies.
2. If there is payment:
Proceed to the nearest Authorized Agents Banks (AAB's) of the Revenue District Office where
you are required to register and present the duly accomplished BIR Form 2550 Q with the
required attachments and your payment.
In places where there are no AAB's, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office where you
are required to register and present the duly accomplished BIR Form 2550 Q, together with the
required attachments and your payment.
Receive your copy of the duly stamped and validated form from the teller of the
AAB's/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. If there is no payment:
Proceed to the Revenue District Office where you are required to register and present the duly
accomplished BIR Form 2550 Q, together with the required attachments.
Receive your copy of the duly stamped and validated form from the RDO representative.

NOTE:
1. For taxpayers with branches, only one consolidated return shall be filed for the principal place
of business or head office and all the branches.
2. The Quarterly List of Sales and Purchases shall be submitted in magnetic form using 3.5-inch
floppy diskette following the format provided under Section 4.110-4 (Subsection G) of RR 82002.

Deadline
Within twenty five (25) days following the close of taxable quarter of the taxpayer (both for
manual filing and filing through eFPS)

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Tax Rates
For output tax (0% or 10%)
For input tax
1. 0% or 10%
2. Transitional input tax rates (8% or 10%)
3. Presumptive input tax rate (1-1/2%) and
4. Creditable VAT withheld by the Government and the licensee or lessee (3%, 6%, 8.5% and
10%)
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RELATED REVENUE ISSUANCES

RR No. 5-87-Regulations implementing the provisions of Title IV of the Tax Code imposing
VAT on importation of goods and sales and services
RR No. 3-89 - Regulations governing the imposition of 10% VAT on deposits for returnable
containers

 RR No. 5-93 - Implementing guidelines requiring the monthly payment of VAT and amending
thereby Section 110 of the Tax Code
RR No. 7-95 - Consolidated Value-Added Tax Regulations
RR No. 5-96 - Amendment to Sections 245 of the Tax Code in relation to Revenue Regulations
No. 7716 - Export Services and Importation of Meat to WTO Member VAT exempt.
RR No. 6-97 - Implementing Republic Act. No. 2241 An Act Amending Republic Act no. 7716,
otherwise known as the Expanded Value-Added Tax Law, and other pertinent provisions of the
National Internal Revenue Code, as amended and further amending Revenue Regulations No. 795, as amended otherwise known as the Consolidated Value-Added Tax Regulations
RR No. 13-97 - Amending further Revenue Regulations No. 7-95 as last amended by Revenue
Regulations No. 6-97
RR No. 7-99 - Amends further Revenue Regulations No. 7-95 relative to the submission of the
Summary Lists of Sales and Purchases in magnetic form
RR No. 8-99 - Provides penalties for violation of the requirement that output tax on sale of
goods and services should not be separately indicated in the sales invoice or official receipt
RR No. 18-99 - Prescribes the regulations relative to the imposition of VAT on services of
banks, non-bank financial intermediaries and finance companies beginning January 1, 2000
RR No. 19-99 - Prescribes the regulations relative to the imposition of VAT beginning January
1, 2000 on the sale of services by persons engaged in the practice of profession or calling and
professional services rendered by general professional partnerships; services rendered by actors,
actresses, talents, singers, and emcees; radio and television broadcasters and choreographers;
musical, radio, movie, televisions and stage directors; and professional athletes
RR No. 4-2000 - Prescribes the posting in place of business of a notice on the requirement for
the issuance of sales/commercial invoices and/or official receipts by persons engaged in trade or
business, including the exercise of profession
RR No. 6-2001 - Amends pertinent pro1visions of certain revenue issuances relative to the
inclusion of additional taxpayers to be subject to Final Withholding Tax, revision of the
Withholding Tax rates on certain income payments subject to Creditable Withholding Tax, time
for the filing of various tax returns and payment of the taxes due thereon and others
RR No. 11-2003 - Extends further the deadline for registration and other compliance

requirements during the transitory period of the imposition of Value-Added Tax (VAT) on sale of
services by professionals and brokers
RR No. 12-2003 -Amends certain provisions of RR No. 18-99 which governs the imposition of
VAT on services of banks, non-bank financial intermediaries and finance companies beginning
January 1, 2003
RR No. 14-2003 - Amending Revenue Regulations No. 2-98, as amended, in order to simplify
the collection of tax, through withholding at the source, on sales of goods or services subject to
3% percentage tax under Section 116 of the Code, and/or to the value-added tax (VAT) under
Sections 106 and 108 of the same Code

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CODAL REFERENCE
Sections 105 to 115 of the National Internal Revenue Code
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FREQUENTLY ASKED QUESTIONS

I. General VAT Queries
1) Who are required to file VAT returns and/or pay VAT?
Every person or entity who in the course of his trade or business, sells or leases goods,
properties and services subject to VAT, if the aggregate amount of actual gross sales or receipts
exceed Five Hundred Fifty Thousand Pesos (P 550,000.00) for any twelve month period
A person required to register as VAT taxpayer but failed to register
A person who imports goods
2) Where are VAT returns filed?
The Monthly VAT Declaration (BIR Form 2550M) and Quarterly VAT Return (BIR Form
2550Q) shall be filed with any Authorized Agent Bank (AAB) in the place where the taxpayer is
registered or required to be registered.

In cases of no-payment, the return shall be filed with the Revenue District Office (RDO)/LTDO
and LTAD where the taxpayer is registered or required to be registered.
In places where there are no AABs, it shall be filed with and the tax paid to the Revenue
Collection Officer or duly Authorized City or Municipal Treasurer of the place where the RDO is
located.
3) What is "output tax"?
Output tax means the VAT due on the sale, lease or exchange of taxable goods or properties or
services by any person registered or required to register under section 236 of the Tax Code.
4) What is "input tax"?
Input tax means the VAT paid by a VAT-registered person in the course of his trade or business
on importation of goods or local purchase of goods or services, including lease or use of
property, from a VAT-registered person. It shall also include the transitional input tax determined
in accordance with Section 111 of the Tax Code
5) What comprises "goods or properties"?
The term "goods or properties" shall mean all tangible and intangible objects, which are capable
of pecuniary estimation and shall include:
a) Real properties held primarily for sale to customers or held for lease in the ordinary course of
trade or business
b) 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
c) The right or the privilege to use in the Philippines any industrial, commercial or scientific
equipment
d) The right or the privilege to use motion picture film, films, tapes and discs
e) Radio, television, satellite transmission and cable television time
6) What comprises "sale or exchange of services"?
The term "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 the following:
a) Construction and service contractors
b) Stock, real estate, commercial, customs and immigration brokers
c) Lessors of property, whether personal or real

d) Warehousing services
e) Lessors or distributors of cinematographic films
f) Persons engaged in milling, processing, manufacturing or repacking goods for others
g) Proprietors, operators or keepers of hotels, motels, resthouses, pension houses, inns, resorts
h) Proprietors or operators of restaurants, refreshment parlors, cafes and other eating places,
including clubs and caterers
i) Dealers in securities
j) Lending investors
k) Transportation contractors on their transport of goods or cargoes, including persons who
transport goods or cargoes for hire and other domestic common carriers by land, air and water
relative to their transport of goods or cargoes
l) Services of franchise grantees of telephone and telegraph, radio and television broadcasting
and all other franchise grantees except those under Section 119 of the Tax Code
m) Services of banks, non-bank financial intermediaries and finance companies
n) Services of non-life insurance companies (except their crop insurances), including surety,
fidelity, indemnity and bonding companies
o) Similar services regardless of whether or not the performance thereof calls for the exercise or
use of the physical or mental faculties
The phrase "sale or exchange of services" shall include:
a) The lease or the use of or the right or privilege to use any copyright, patent, design or model,
plan, secret formula or process, goodwill, trademark, trade brand or other like property or right
b) The lease or the use of, or the right to use of any industrial, commercial or scientific
equipment
c) The supply of scientific, technical, industrial or commercial knowledge or information
d) The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of
enabling the application or enjoyment of any such property, or right or any such knowledge or
information
e) The supply of services by a nonresident person or his employee in connection with the use of
property or rights belonging to, or the installation or operation of any brand, machinery or other
apparatus purchased from such non-resident person
f) The supply of technical advice, assistance or services rendered in connection with technical
management or administration of any scientific, industrial or commercial undertaking, venture,
project or scheme
g) The lease of motion picture films, films, tapes and discs
h) The lease or the use of or the right to use radio, television, satellite transmission and cable
television time
7) What is a zero-rated sale?

It is a sale, barter or exchange of goods, properties and/or services subject to 0% VAT pursuant to
Sections 106 (A) (2) and 108 (B) of the Tax Code.
8) What transactions are considered as zero-rated sales?
The following services performed in the Philippines by VAT-registered persons shall be subject
to zero percent (0%) rate:
a) 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)
b) Services other than those mentioned in the preceding paragraph, 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)
c) 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
d) Services rendered to vessels engaged exclusively in international shipping
e) Services performed by subcontractors and/or contractors in processing, converting, or
manufacturing goods for an enterprise whose export sales exceeds seventy percent (70%) of total
annual production

The following sales shall be subject to zero percent (0%) rate:

a) Sale of goods which are directly shipped by a VAT-registered resident to a place outside the
Philippines
b) Sale of goods which are considered as "deemed" export sales by a VAT-registered person to
certain entities who are also residents of the Philippines:
Sales to export-oriented enterprises which the Code considers as export sales at the level of the
supplier of raw materials
Sales to entities, the exemption of which, under a special law or an international agreement with
the Government of the Philippines, effectively zero rates such sales
Sales of gold to the Bangko Sentral ng Pilipinas
Foreign currency denominated sales of goods
c) Sales considered as exportation of goods under a special law such as Executive Order No. 226
(Omnibus Investments Code of 1987) and Republic Act No. 7916 (PEZA Law)
9) Where will taxpayers file their applications for VAT zero-rating?

Taxpayers may file their application with the Audit Information, Tax Exemption and Incentives
Division (AITEID) at the BIR National Office.
10) What is a Contractor's Final Payment Release Certificate and where should taxpayers file
their application for this?
The Contractor's Final Payment Release Certificate is issued by the BIR before a government
contractor is fully paid for his contract with the government. Taxpayers may file their application
at the BIR National Office at the Audit Information, Tax Exemption and Incentives Division
(AITEID)
11) What transactions are considered as deemed sales?
The following transactions are considered as deemed sales:
a) 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
b) Distribution or transfer to:
Shareholders or investors as share in the profits of the VAT-registered person; or
Creditors in payment of debt
c) Consignment of goods if actual sale is not made within sixty (60) days following the date such
goods were consigned
d) Retirement from or cessation of business, with respect to inventories of taxable goods existing
as of such retirement or cessation
12) What is VAT-exempt sale?
It is a sale of goods, properties or service and the use or lease of properties which is not subject
to output tax and whereby the buyer is not allowed any tax credit or input tax related to such
exempt sale.
13) What are the VAT-exempt transactions?
a) Sale of non-food agricultural products, marine and forest products in their original state by the
primary producer or owner of the land where the same were produced
b) Sale of cotton and cotton seeds in their original state and copra
c) Sale or importation of 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
and breeding stock and generic materials thereof
d) 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)

e) Sale or importation of coal and natural gas, in whatever form or estate, and petroleum products
(except lubricating oil, processed gas, grease, wax and petrolatum) subject to the Excise Taxes
imposed under Title VI of the Tax Code
f) Sale or importation of raw materials to be used by the buyer or importer himself in the
manufacture of petroleum products subject to excise tax, except lubricating oil, processed gas,
grease, wax and petrolatum
g) Importation of passenger and/or cargo vessels of more than five thousand tons, whether
coastwise or ocean-going, including engine and spare parts of said vessel to be used by the
importer himself as operator thereof
h) Importation of personal and household effects belonging to 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
i) Importation of professional instruments and implements, wearing apparel, domestic animals,
and personal household effects (except any vehicle, vessel, aircraft, machinery, other goods for
use in the manufacture and merchandise of any kind in commercial quantity) belonging to
persons coming to settle in the Philippines, for their own use and not for sale, barter or exchange,
accompanying such persons, or arriving within ninety (90) days before or after their arrival, upon
the production of evidence satisfactory to the Commissioner of Internal Revenue, that such
persons are actually coming to settle in the Philippines and that the change of residence is bona
fide
j) Services subject to percentage tax under Title V of the Code
k) Services by the agricultural contract growers and milling for others of palay into rice, corn
into grits, and sugar cane into raw cane sugar
l) Medical, dental, hospital and veterinary services subject to the provisions of Sec. 17 of RA
7716, as amended
m) Educational services rendered by private educational institutions, duly accredited by the Dept.
of Education Culture and Sports (DECS), and Commission on Higher Education (CHED), and
those rendered by the government educational institutions
n) Sale by the artist himself of his works of art, literary works, musical compositions and similar
creations, or his services performed for the production of such works
o) Services rendered by individuals pursuant to an employer-employee relationship
p) Services rendered by regional or area headquarters 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
q) Transactions which are exempt under international agreements to which the Philippines is a
signatory, or under special laws, except those under the following laws:
P.D. No. 66 - Export Processing Zone Authority (EPZA) registered firms
P.D. No. 529 - Petroleum Exploration Concessionaires under the Petroleum Act of 1949

 P.D. No. 1590 - Philippine Airlines (PAL) relative to domestic transport of goods or cargoes
r) Sales by agricultural cooperatives duly registered 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; 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
s) Sales by electric cooperatives duly registered with the Cooperative Development Authority
(CDA) or National Electrification Administration (NEA), relative to the generation and
distribution of electricity, as well as their importation of machineries and equipment, including
spare parts, which shall be directly used in the generation and distribution of electricity
t) Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered
with the Cooperative Development Authority (CDA) whose lending operation is limited to their
members
u) Sales by non-agricultural, non-electric and non-credit cooperatives duly registered with the
Cooperative Development Authority: Provided, that the share capital contribution of each
member does not exceed Fifteen Thousand Pesos (P 15,000) and regardless of the aggregate
capital and net surplus ratably distributed among the members
v) Export sales by persons who are not VAT-registered
w) Lease of a residential unit with a monthly rental not exceeding Eight Thousand Pesos (P
8,000.00), regardless of the amount of aggregate rentals received by the lessor during the year,
provided that the exemptions likewise applies to lease of residential units where the monthly
rental per unit exceeds P 8,000.00 but the aggregate rentals of the lessor during the year do not
exceed P 550,000.00.
x) Sale, importation, printing or publication of books and any newspaper, magazine, review or
bulletin which appears at regular intervals with fixed prices for subscription and sale and which
is not devoted principally to the publication of paid advertisements
y) 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 does not exceed
the amount of P 550,000.00
z) Sale of real properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business or real property utilized for low-cost and socialized housing as
defined by Republic Act No. 7279, otherwise known as the Urban Development and Housing Act
of 1992 and other related laws, house and lot and other residential dwelling valued at P
1,000,000 and below.
II. RELIEF-Related Queries
1) What is 'RELIEF"?
RELIEF means Reconciliation of Listings for Enforcement. It supports the third party
information program of the Bureau through the cross referencing of third party information from

the taxpayers' Summary Lists of Sales and Purchases prescribed to be submitted on a quarterly
basis.
2) Who are required to submit Summary List of Sales?
VAT taxpayers with quarterly total sales/receipts (net of VAT) exceeding Two Million Five
Hundred Thousand Pesos (P 2,500,000) are required to submit a Summary List of Sales.
3) Who are required to submit Summary List of Purchases?
VAT taxpayers with quarterly total purchases (net of VAT) exceeding One Million Pesos (P
1,000,000) are required to submit Summary List of Purchases.
4) What are the Summary Lists required to be submitted?
a) Quarterly Summary List of Sales to Regular Buyers/Customers and Casual Buyers/Customers
and Output Tax;
b) Quarterly Summary List of Local Purchases and Input tax; and
c) Quarterly Summary List of Importation
5) Who are "Casual Buyers/Customers?"
Casual Buyers/Customers refer to buyers/customers who are engaged in business/ exercise of
profession but did not qualify as regular buyers/customers, the amount of individual transaction
is P 100,000 or more but did not qualify as regular buyers/customers.
6) Who are "Regular Buyers/Customers"?
They shall refer to buyers/customers who are engaged in business or exercise of profession with
whom the taxpayer has transacted at least six (6) transactions in the previous year or current year,
regardless of the amount of sale per transaction.
7) What are the contents of the Quarterly Summary List of Sales to Regular Buyers/Customers
and Casual Buyers/Customers and Output Tax?
The Quarterly Summary List of Sales to regular buyers/customers and casual buyers/customers
and output tax shall indicate the following:
a) BIR Registered Name of the Buyer who is engaged in business/exercise of profession
b) TIN of the Buyer for sales subject to VAT
c) Exempt Sales
d) Zero-Rated Sales

e) Sales Subject to VAT (exclusive of VAT)

f) Output Tax (VAT on Sales)
8) What are the contents of the Quarterly Summary List of Local Purchases and Input Tax?
The Quarterly Summary List of Local Purchases and Input Tax shall indicate the following:
a) BIR Registered Name of the Seller/Supplier/Service Provider
b) Address of Seller/Supplier/Service Provider
c) Taxpayer Identification Number (TIN) of the Seller
d) Exempt Purchases
e) Zero-Rated Purchases
f) Purchases Subject to VAT (Exclusive of VAT) On Services
On Capital Goods
On Goods and Other than Capital Goods
g) Creditable Input Tax
h) Non-Creditable Input Tax
9) What are the contents of the Quarterly Summary List of Importations?
The Quarterly Summary List of Importations shall indicate the following:
a) Import Entry Declaration Number
b) Assessment /Release Date
c) Date of importation
d) Name of Seller
e) Country of Origin
f) Dutiable Value
g) All Charges Before release from the Customs' Custody
h) Landed Cost:
Exempt
Taxable (Subject to VAT)
i) VAT Paid
j) Official Receipt (OR) No. of the Official Receipt Evidencing Payment of the Tax
k) Date of VAT Payment
10) When and where will taxpayers file/submit the Quarterly Summary List of Sales and
Purchases?

The quarterly summary list of sales or purchases whichever is applicable shall be submitted to
the RDO or LTDO or LTAD having jurisdiction over the taxpayer on or before the twenty-fifth
(25th) day of the month following the close of each taxable quarter.
11) Can the VAT withheld and paid for the non-resident recipient, which VAT is passed on to the
resident withholding agent by the non-resident recipient of the income, be claimed as an input
tax?
Yes. It can be claimed as an input tax by the said VAT registered Withholding Agent upon filing
his own VAT return, subject to the rules on allocation of input tax among taxable, zero-rated and
exempt sales.
12) Are all Value Added Taxpayers required to mandatorily file the summary list in magnetic
form using 3.5 inch floppy diskette?
Yes. Submission of the summary list in diskette form shall be required for the taxable quarter
where the total sales (taxable net of VAT, zero-rated, exempt) exceed P 2,500,000 or total
purchases (taxable net of VAT, zero-rated, exempt) exceed P 1,000,000.
13) What is the clear-cut rule on the mandatory submission of summary lists in diskette form?
The following are the rules in the submission of the said summary lists:
a) They are required to submit the said summary lists in diskette form for the taxable quarter
where the total sales (taxable net of VAT, zero-rated, exempt) exceed P 2,500,000 or total
purchases (taxable net of VAT, zero-rated, exempt) exceed P 1,000,000.
b) Those who did not meet the threshold need not file summary lists; however, if there is a
taxable quarter where aforesaid VAT taxpayers meet or exceed the threshold, they will be
required to submit the prescribed electronic format on such taxable quarter and on the next three
(3) succeeding taxable quarters, regardless of whether or NOT such succeeding taxable quarter
sales and/or purchases meet/exceed the threshold.
14) What is the penalty for failure to submit the quarterly summary list in the prescribed manner?
Administrative Penalty
P 1,000 - For each failure to file, keep or supply the required documents
Aggregate amount not to exceed P 25,000 for the taxable year
Criminal Penalty

Willful failure to keep any record or to supply the information at the time or times required shall
be subject to the criminal penalty under the Tax Code of 1997.
*Compromise on such violation SHALL NOT relieve the violating taxpayer from the obligation
to submit the required documents.
III. RELIEF Technical Queries
1) What needs to be done to resolve errors occurring during the use of the RELIEF system?
Make sure that there is only one session of RELIEF active at all times. Close all RELIEFsessions
and re-activate again. Make sure that a clean copy of the installer disk is on hand. Get the latest
copy from a nearest Revenue District Office or Revenue Data Center or download from the BIR
website at www.bir.gov.ph.
2) Is it possible to use the system for more than one company in a single PC? (For accounting
and law firms taking charge of transactions of numerous companies)
Yes. Create new folder/s in your root directory. Rename the folder/s with the company name for
identification purposes. Copy all the contents of the folder BIR_RLF and paste into each of the
newly created folders. Then create shortcuts for the BIRRLF.EXE file found in each folder and
paste them to your desktop. It is also recommended to rename these files affixing them with the
name of the company (for example: ABC Company_Data Entry). Make sure that Owner
Information is changed/updated for newly created folders.
3) How can the user resolve the error "The Input Tax/Output Tax must be equivalent to 10% of
the transaction" that occurs during validation?
If this is the only error, the user could ignore this error and proceed to submitting the summary
lists since the RDO has the updated validation module. The user could also request for a copy of
the URLFVALID.EXE file from the RDO to update their RELIEF Validation module. They only
need to decompress the file in the root directory of their PC.
4) What is the prescribed screen resolution for the user to view all available options/buttons after
selecting a type of transaction?
Check the settings of the screen display (desktop) by going to the Control Panel then go to
Display and adjust the screen setting to 800x600 or 1024x768 resolution.
5) Can the user submit their summary list using their own extract program?
The user may use their own extract program provided that their system has the ability to convert
the database files into comma delimited text files. Have their IT department develop a script

within their database program to do this. Please refer to the prescribed templates / file formats
available at RDO or they can download the technical annexes from the BIR website.
User can also submit using the excel format as long as it conforms with the BIR file format under
RMC 24-2002. User can ask their RDO for a copy of the Excel templates for their guidance.
6) Where can the users get the RELIEF installer, technical annexes and job-aids?
They can get copies from the RDO or RDC. If they have access to the internet, they can access
the BIR webpage (www.bir.gov.ph) then go to BIR FORMS. Click on the 2550Q form to go to
the location of the downloadable installers, annexes and job-aids.
7) How can the user successfully validate a generated file (.DAT) if upon clicking the Validate
File button, a BIR System Message stating "Command contains unrecognized phrase/keyword.
Error Number: 36" appeared?
The user must make sure that the generated file is not located inside a folder where the
foldername contains spaces. The user can rename the folder wherein blank spaces are replaced
with underscores. The user can get the update patch from his RDO or from the web to update
their Validation module.
8) How will the user remove or uninstall the RELIEF program from the computer?
Select RUN from the Taskbar Start Menu then type C:\BIR_RLF\SETUP\SETUP.EXE, press the
Enter key and follow the prompts.
9) For users who will submit using the Excel format, what is the prescribed formula for
computations?
Users always encounter the "Header not equal to total details" Error during validation. All
computations in the Excel format must be rounded off to the nearest 2 decimal places. (For
example: L3=J3*K3 - it must be L3=round(J3*K3,2))
10) In case of detailed explanations for questions, where can the user seek help?
User can get in touch with the Taxpayer Service Section of their RDO or contact the BIR
Helpdesk at 926-9630, 981-7050 to 51, 925-2015-17 or email at hdeskno@bir.gov.ph.
IV. VAT on Professionals
1) How to compute the VAT on professionals

The general formula is:

Output Taxes - Input Taxes = VAT Payable
Fees and Expenses including VAT: (a)
Professional Fee with VAT x 1/11 Output Tax
Less: Profession-related Expenses x 1/11 (with VAT Receipts) Input Tax
Difference VAT Payable
Fees and Expenses excluding VAT: (b)
Professional Fee x 10% Output Tax
Less: Profession-related Expenses x 10% (with VAT Receipts) Input Tax
Difference VAT Payable
NOTE:
(a) Computation is in accordance with Secs. 106D and 108C of the Code.
(b) Computation per VAT Return presentation.
VAT Payable in (a) and (b) computations should be the same.
2) What are the allowable Input VAT?
10% of purchase price, exclusive of VAT or 1/11 of total VAT invoice/OR amount on:
Office Supplies / Equipment
Rental of office
Accountant's fees
Other purchases of Goods and Services related to professional fees earned
Note: 1) Supplier of goods/services must be VAT registered
2) Substantiated with VAT OR/invoice
3) Illustrations of VAT Computation
Assumption 1: PP absorbs the VAT
In CY 2002, Professional Fee for Services was P 1,000,000
In CY 2003, Professional Fee for Services is P 1,000,000
Treatment:
CY 2002: Income is P 1,000,000.00
CY 2003:
Income is 10/11 of P 1,000,000 P 909,091.00

Output VAT is 1/11 of P 1,000,000 90,909.00

Gross Receipt from Clients/Px + VAT P 1,000,000.00
Assumption 2: Payor absorbs the VAT
In CY 2002, Professional Fee for Services was P 1,000,000
In CY 2003, Professional Fee for Services is P 1,000,000, plus 10% VAT of
P 100,000
Treatment:
CY 2002: Income is P 1,000,000.00
CY 2003:
Income P 1,000,000.00
Income P1M x 10% Output tax 100,000.00
Gross Receipt from Clients/ Px + VAT P1,100,000.000
4) How can I compute the 20% Withholding Tax using Assumptions 1 and 2?
CY 2002:
Income P 1,000,000.00
20% Withholding Tax 200,000.00
Net Amount Received from Payor P 800,000.00

CY 2003: (PP absorbs the VAT)

Income P 909,091.00
Add: 10% VAT 90,909.00
Gross Amount Rec'd. from Payor P 1,000,000.00
Less: 20% of P 909,091.00 181,818.00
Net Amount Received from Payor P 818,182.00
CY 2003: (Payor Absorbs the VAT)
Income P 1,000,000.00
Add: 10% VAT 100,000.00
Gross Amount Rec'd. from Payor P 1,100,000.00
Less: 20% of P 1,000,000 200,000.00
Net Amount Received from Payor P 900,000.00
5) How to record the professional fee in the Books of Accounts of the Professional Practitioner
Debit: Cash 900,000
Debit: Creditable W/Tax 200,000

Credit: Professional Fees 1,000,000

Credit: Output VAT Payable 100,000
6) How to record the professional fee in the Books of Accounts of the Clients/Patients
Debit: Expenses 1,000,000
Debit: Input VAT Credit 100,000
Credit: Cash 900,000
Credit: Withholding Tax Payable 200,000
7) How to issue a VAT Official Receipt by the Professional Practitioner
CLICK to View tthe Receipt
The invoice or official receipt of a VAT-registered PP must show his name, address, TIN, and
professional fee, with VAT and other particulars.
8) Compliance Requirements for PPs
Payment of P 500 annual registration fee, and every year thereafter, on or before January 31.
Printing and registration of VAT Official Receipts
Registration and keeping of Books of Accounts
Filing of monthly VAT declarations and quarterly VAT returns
If applicable, submission of the Summary List of Sales and Purchases in softcopies (diskettes).
Please use the BIR data entry module.
Registration as a VAT Taxpayer
File Form 1901 (Application for Registration) and Form 1925 (TIN Capture Form) for new
taxpayers with the RDO having jurisdiction over PP's registered address. (By April 2003, TIN
application was made available through the Internet, via the BIR Website at www.bir.gov.ph.)
For old taxpayers registered as Non-VAT, file Form 1905 (Update Form) to change registration
to VAT, or from NV-Exempt to NV-3%.
Each registrant (for new or for change of registration) must indicate their specific profession
(i.e., doctor, lawyer, CPA, etc.) in the appropriate registration form.
Registration of Official Receipts
Submit Inventory of Non-VAT unused receipts (as of December 31, 2002) - number of booklets
and serial numbers not later than March 19, 2003.
Stamp unused receipts with "VAT-registered as of ________" on ALL copies, and use only until

June 30, 2003

For new Official Receipts, secure BIR Permit to Print
Registration and Keeping of Books of Accounts
Journal
Ledger
Subsidiary Professional Income Book
Subsidiary Purchases / Expenses Book
Filing and Payment of VAT
Forms to be used:
Form 2550M (Monthly VAT Declaration)
Form 2550Q (Quarterly VAT Return)
Period/Form1st Month of the Quarter (Form 2550M) Due dates20th day of the next month
2nd Month of the Quarter (Form 2550M) 20th day of the next month
3rd Month, con-solidated for the Quarter (Form 2550Q) 25th day of the next month
Where to File and Pay the VAT
Pay to the Accredited Agent Bank (AAB) within the Revenue District Office (RDO) where the
PP is registered. In areas where there are no AABs, pay to the Collection Agent in the
municipality of the RDO where registered. If without VAT payment, file return with the RDO.
Other Transitional Requirements
Submit Billings for Uncollected Professional fee for Sale of Services Rendered on or before
December 31, 2002, not later than March 19, 2003.
Submit Inventory of Goods (other than Capital Goods), Materials, and Supplies, as of
December 31, 2002, not later than March 19, 2003, to claim transitional (presumptive) input
VAT.
V. VAT on Doctors
1) If a doctor has several clinics located in different districts, should he register and pay the
corresponding fee for each of the clinics?
Yes, the doctor should register and pay the corresponding fee for each of the clinic located in
different districts, as each clinic is considered a separate and distinct establishment.

2) What is the tax treatment for a doctor who has no clinic but is affiliated with several hospitals?
The doctor is considered a professional, subject to 10% VAT provided the gross professional fees
is more than P= 550,000.00 and 3% Percentage Tax if P= 550,000.00 and below. He should
register his clinic but not his affiliations.
3) A doctor operates a clinic and at the same time hires (as employees) several doctors as part of
his staff. For the services provided to patients, the clinic issues the official receipt of the clinic.
How will the VAT be charged when the clinic later gives to the individual doctors their
professional fees?
If the hired doctors are employees receiving compensation income, they are not subject to VAT.
If, however, they share in the professional fees, then there exists a professional partnership and
their income/fee is subject to VAT. Any amount they receive from the clinic shall be considered
as inclusive of VAT. But the clinic is exempt from VAT as far as medical services are concerned,
but the professional fee received is subject to VAT.
4) Can a professional doctor claim input VAT? What are the sources of input taxes?
Yes, he can claim input VAT on his purchases that are related to the practice of profession and
supported with a VAT invoice/official receipts issued in his name.
5) Is a doctor with a maximum of 10 consultations a year required to have his own receipts
printed? Is this not too costly for him?
Yes, the determining factor is his practice of profession and not the number of transactions in a
year. Section 237 of the Tax Code provides that all persons subject to internal revenue tax shall
for each sale/transfer of merchandise or for services rendered valued at P= 25.00 or more must
issue a duly registered receipt or sales invoice.
6) Are the fees of physical therapists, not a GPP, subject to VAT?
Yes, they are subject to 10% VAT if their gross receipt is more than P= 550,000.00. If their gross
receipt is P= 550,000.00 or less they are subject to 3% Percentage Tax, unless they opt to register
as VAT taxpayer.
VI. VAT on Lawyers
1) What constitute gross receipts of lawyers that is subject to VAT?
The gross receipts of lawyers may constitute of, but not limited to the following: retainers' fees,
acceptance fees, appearance fees, consultation fees, notarial fees and the like

2) If a lawyer, employed in the government, provides/operates a notarial service, is he required to

register as VAT taxpayer with regard to his notarial fees?
Yes, because his notarial fees is part of his professional income and not earned under an
employee-employer relationship.
VII. VAT on Insurance Agents
1) An agent of a life insurance company has been registered as a Non- VAT Taxpayer, is it
necessary for him to register as VAT Taxpayer?
An agent is required to register as VAT taxpayer if he is earning more than P= 550,000.00 in any
twelve-month period. If his expected income for the 12-month period is P= 550,000.00 or less,
he is subject to 3% Percentage Tax, unless he opts to register as a VAT taxpayer.
2) Is the P= 500.00 registration fee a one-time payment only? Will it apply to the succeeding
years?
The P= 500.00 is a registration fee payable annually on or before January 31 of each year.
3) What particular books of accounts are necessary for taxation purposes?
Generally, the books of accounts necessary for taxation purposes are Journals and Ledgers.
Professional taxpayers however, are required to keep Subsidiary Professional Income Book and
Subsidiary Purchases/Expense Book for their gross sales/gross receipts and purchases/expenses.
4) Are they required to issue Official Receipts?
Yes, Section 237 of the Tax Code provides that all persons subject to internal revenue tax shall
for each sale/transfer of merchandise or for services rendered valued at P= 25.00 or more must
issue a duly registered receipt or sales invoice. In addition, in order to claim Input VAT, the
name, address and TIN of the purchaser/client must be indicated in the receipt/invoice.
VIII. Other Professional Practitioners
1) What about other individuals who practice certain calling but need not undergo government
exam?
Said individuals are subject to VAT if their gross receipts/income is more than P= 550,000.00.
They are subject to 3% Percentage Tax if their gross receipts/income is P= 550,000.00 or less,
unless they opt to register as VAT taxpayer. However, if their service is rendered under an
employee-employer relationship, then they are not subject to VAT nor to Percentage Tax.

Examples of individuals who practice certain calling are tourist guides, trainers, masseurs,
brokers and other individuals who are paying occupational tax in the local or municipal
government, and there exist No employer-employee relationship.