FREQUENTLY ASKED QUESTIONS

I.   General VAT Queries

Who are liable to register as VAT taxpayers?
Any person who, in the course of trade or business, sells,
barters or exchanges goods or properties or engages in
the sale or exchange of services shall be liable to register
if:
● His gross sales or receipts for the past twelve (12)

months, other than those that are exempt under

Section 109 (A) to (U), have exceeded Three Million
Pesos (P3,000,000.00): or
● There are reasonable grounds to believe that his

gross sales or receipts for the next twelve (12)

months, other than those that are exempt
under Section 109 (A) to (U), will exceed Three
Million Pesos (P3,000,000.00).
When is a new VAT taxpayer required to apply for
registration and pay the registration fee?
New VAT taxpayers shall apply for registration as VAT
Taxpayers and pay the corresponding registration fee of
five hundred pesos (P500.00) using BIR Form No.
0605 for every separate or distinct establishment or
place of business before the start of their business
following existing issuances on registration.
Thereafter, taxpayers are required to pay the annual
registration fee of five hundred pesos (P500.00) not later
than January 31, every year.
What compliance activities should a VAT taxpayer,
after registration as such, do promptly or periodically?
The following compliance activities must be performed
by a VAT-registered taxpayer:
● Pay the annual registration fee of P500.00 for every

place of business or establishment that generates

sales;
● Register the books of accounts of the business/

occupation/calling, including practice of profession,

before using the same;
● Register the sales invoices and official receipts as

VAT-invoices or VAT official receipts for use on

transactions subject to VAT. (If there are other
transactions not subject to VAT, a separate set of
non-VAT invoices or non-VAT official receipts need to
be registered for use on transactions not subject to
VAT);
● Filing of the Monthly Value-added Tax Declaration on
or before the 20th day following the end of the
taxable month (for manual filers)/on or before the
prescribed due dates enunciated in RR No. 16-2005
(for e-filers) using BIR Form No. 2550M and of the
Quarterly VAT Return on or before the 25th day
following the end of the taxable quarter using BIR
Form No. 2550Q, reflecting therein gross receipts (for
seller of service)/ gross sales (for seller of goods) and
output tax (VAT on sales); purchases of goods and
services made in the course of trade or business/
exercise of profession and input tax (VAT on
purchases), other allowable tax credits as in the case
of advance VAT payment and VAT withheld by
government payors, and VAT payable or excess input
VAT, whichever is applicable, with the accredited
agent banks (AABs) of the BIR or Revenue Collection
Officers (RCOs) of the BIR (in areas without AAB), for
returns with payment, or with the RDO/LTDO having
jurisdiction over the taxpayer (home RDO/LTDO), for
returns without payment. (The monthly VAT
Declaration and the Quarterly VAT Return shall reflect
 the consolidated total for all the taxable lines of
activity and all the establishments - head office and
branches);
● Submit with the RDO/LTDO having jurisdiction over

the taxpayer, on or before the deadline set in the filing

of the Quarterly VAT Return, the soft copy of the
Quarterly Schedule of Monthly Sales and Output Tax
(if the quarterly sales exceed P2,500,000.00), and
the soft copy of the Quarterly Schedule of Monthly
Domestic Purchases and Input Tax/ the soft copy of
the Schedule of Transactional/Individual Importation
( if the quarterly total purchases exceed
P1,000,000.00), reflecting therein the required data
prescribed under existing revenue issuances.
What is the liability of a taxpayer becoming liable to
VAT and did not register as such?
Any person who becomes liable to VAT and fails to
register as such shall be liable to pay the output tax as if
he is a VAT-registered person, but without the benefit of
input tax credits for the period in which he was not
properly registered.
Who may opt to register as VAT and what will be his
liability?
● Any person who is VAT-exempt under Sec. 109 of the

Tax Code, as amended, may, in relation to Sec. 109

(2) of the same Code, elect to be VAT-registered by
registering with the RDO that has jurisdiction over the
head office of that person, and pay the annual
registration fee of P500.00 for every separate and
distinct establishment.
● Any person who is VAT-registered but enters into

transactions which are exempt from VAT (mixed

transactions) may opt that the VAT apply to his
transactions which would have been exempt under
Section 109 of the Tax Code, as amended.
● Franchise grantees of radio and/or television

broadcasting whose annual gross receipts of the

preceding year do not exceed ten million pesos
(P10,000,000.00) derived from the business
covered by the law granting the franchise may opt for
VAT registration. This option, once exercised, shall be
irrevocable. (Sec. 119, Tax Code).
● Any person who elects to register under optional

registration shall not be allowed to cancel his

 registration for the next three (3) years.
The above-stated taxpayers may apply for VAT
registration not later than ten (10) days before the
beginning of the calendar quarter and shall pay the
registration fee unless they have already paid at the
beginning of the year. In any case, the Commissioner of
Internal Revenue may, for administrative reason deny any
application for registration. Once registered as a 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.
What are the instances when a VAT-registered person
may cancel his VAT registration?
● If he makes a written application and can

demonstrate to the commissioner's satisfaction that

his gross sales or receipts for the following twelve
(12) months, other than those that are exempt under
Section 109 (A) to (U), will not exceed Three Million
Pesos (P3,000,000.00); or
● If he has ceased to carry on his trade or business, and

does not expect to recommence any trade or

business within the next twelve (12) months.
When will the cancellation for registration be
effective?
The cancellation for registration will be effective from the
first day of the following month the cancellation was
approved.
What is the invoicing/receipt requirement of a VAT-
registered person?
A VAT registered person shall issue :
● A VAT invoice for every sale, barter or exchange of

goods or properties; and

● A VAT official receipt for every lease of goods or

properties and for every sale, barter or exchange of

services.
May a VAT-registered person issue a single invoice/
receipt involving VAT and Non-VAT transactions?
Yes. He may issue a single invoice/ receipt involving VAT
and non-VAT transactions provided that the invoice or
receipt shall clearly indicate the break-down of the sales
price between its taxable, exempt and zero-rated
components and the calculation of the Value-Added Tax
on each portion of the sale shall be shown on the invoice
or receipt.
May a VAT- registered person issue separate invoices/
receipts involving VAT and Non-VAT transactions?
Yes. A VAT registered person may issue separate
invoices/ receipts for the taxable, exempt, and zero-rated
component of its sales provided that if the sales is
exempt from value-added tax, the term "VAT-EXEMPT
SALE" shall be written or printed prominently on the
invoice or receipt and if the sale is subject to zero percent
(0%) VAT, the term "ZERO-RATED SALE" shall be written
or printed prominently on the invoice or receipt.
How is the Value-Added Tax presented in the receipt/
invoice?
The amount of the tax shall be shown as a separate item
in the invoice or receipt.
Sample:
Sales Price P 100,000.00
VAT 12,000.00
Invoice Amount 112,000.00
What is the information that must be contained in the
VAT invoice or VAT official receipt?
1. Name of Seller
2. Description of the goods or properties or nature of
 2.
the service
3. Unit cost
4. Quantity
5. Date of transaction
6. TIN of buyer, if VAT- registered and amount exceeds
P1,000.00
7. Address of Buyer
8. Business Style of Buyer
9. Name of Buyer
10. Statement that the seller is a VAT-registered person,
followed by his TIN
11. Business Address of the Seller
12. Business Style of the Seller
13. Purchase price plus the VAT, provided that
○ The amount of tax shall be shown as a separate

item in the invoice or receipt;

○ If the sale is exempt from VAT, the term "VAT-

EXEMPT SALE" shall be written or printed

prominently on the invoice or receipt;
○ If the sale is subject to zero percent (0%) VAT, the

term "ZERO-RATED SALE" shall be written or

printed prominently on the invoice receipt; and
 ○ If the sale involves goods, properties or services
some of which are subject to and some of which
are zero-rated or exempt from VAT, the invoice or
receipt shall clearly indicate the breakdown of the
sales price between its taxable, exempt and zero-
rated components, and the calculation of the VAT
on each portion of the sale shall be shown on the
invoice or receipt.
14. Authority to Print Receipt Number at the lower left
corner of the invoice or receipt.
What is the liability of a VAT-registered person in the
issuance of a VAT invoice/ receipt for VAT-exempt
transactions?
If a VAT-registered person issues a VAT invoice or VAT
official receipt for a VAT-exempt transaction but fails to
display prominently on the invoice or receipt the words
"VAT-EXEMPT SALE", the transaction shall become
taxable and the issuer shall be liable to pay the VAT
thereon. The purchaser shall be entitled to claim an input
tax credit on his purchase.
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.
What is "input tax"?
Input tax means the VAT due on or paid by a VAT-
registered on importation of goods or local purchase of
goods, properties or services, including lease or use of
property in the course of his trade or business. It shall
also include the transitional input tax determined in
accordance with Section 111 of the Tax Code,
presumptive input tax and deferred input tax from
previous period.
Does amortization of input VAT still allowable?
Yes , but is only allowed until December 31, 2021 after
which taxpayers with unutilized input VAT on capital
goods purchased or imported shall be allowed to apply
the same as scheduled until fully utilized: Provided, That
in the case of purchase of services, lease or use of
properties, the input tax shall be creditable to the
purchaser, lessee or licensee upon payment of the
compensation, rental, royalty or fee.
What will be the basis of the date of cancellation?
It is the date of issuance of tax clearance by the BIR, after
full settlement of all tax liabilities relative to cessation of
business or change of status of concerned taxpayer
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, among others:
● Real properties held primarily for sale to customers or

held for lease in the ordinary course of trade or

business;
● 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;
● The right or privilege to use in the Philippines of any

industrial, commercial or scientific equipment;

● The right or the privilege to use motion picture films,

films, tapes and discs; and

● Radio, television, satellite transmission and cable

television time.
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, whether
in kind or in cash, including those performed or rendered
by the following:
● Construction and service contractors;
● Stock, real estate, commercial, customs and

immigration brokers;
● Lessors of property, whether personal or real;
● Persons engaged in warehousing services;
● Lessors or distributors of cinematographic films;
● Persons engaged in milling, processing,

manufacturing or repacking goods for others;

● Proprietors, operators or keepers of hotels, motels,

rest houses, pension houses, inns, resorts, theatres,

and movie houses;
● Proprietors or operators of restaurants, refreshment

parlors, cafes, and other eating places, including

clubs and caterers;
● Dealers in securities;
● Lending investors;
● 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 relative to their transport of goods or cargoes;
● Common carriers by air and sea relative to their
transport of passengers, goods or cargoes from one
place in the Philippines to another place in the
Philippines;
● Sale of electricity by generating, transmission by any
entity including the National Grid Corporation of the
Philippines (NGCP), and distribution companies
including electric cooperatives shall be subject to
twelve percent (12%) VAT on their gross receipts.;
● Franchise grantees of electric utilities, telephone and
telegraph, radio and/or television broadcasting and all
other franchise grantees, except franchise grantees
of radio and/or television broadcasting whose annual
gross receipts of the preceding year do not exceed
Ten Million Pesos (P10,000,000.00), and franchise
grantees of gas and water utilities;
● Non-life insurance companies (except their crop
insurances), including surety, fidelity, indemnity and
bonding companies; and
● Similar services regardless of whether or not the
 ●

performance thereof calls for the exercise of use of

the physical or mental faculties.
The phrase "sale or exchange of services" shall likewise
include:
● The lease of 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;
● The lease or the use of, or the right to use of any

industrial, commercial or scientific equipment;

● The supply of scientific, technical, industrial or

commercial knowledge or information;

● 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;
● 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;
● 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;
● The lease of motion picture films, films, tapes and

discs; and
● The lease or the use of or the right to use radio,

television, satellite transmission and cable television

time.
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. It is a taxable
transaction for VAT purposes, but shall not result in any
output tax. However, the input tax on purchases of
goods, properties or services, related to such zero-rated
sales, shall be available as tax credit or refund in
accordance with existing regulations.
What transactions are considered as zero-rated
sales?
The following services performed in the Philippines by
VAT-registered person shall be subject to zero percent
(0%) rate:
● 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);
● Services other than processing, manufacturing or
repacking rendered to a person engaged in business
conducted outside the Philippines or to a non-
resident person 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);
● 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;
● Services rendered to persons engaged in
international shipping or air transport operations,
 including leases of property for use thereof; Provided,
that these services shall be exclusively for
international shipping or air transport operations.
 (Thus, the services referred to herein shall not pertain
to those made to common carriers by air and sea
relative to their transport of passengers, goods or
cargoes from one place in the Philippines to another
place in the Philippines, the same being subject to
twelve percent (12%) VAT under Sec. 108 of the Tax
Code, as amended);
● 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;
● Transport of passengers and cargo by domestic air or
sea carriers from the Philippines to a foreign country.
(Gross receipts of international air carriers and
international sea carriers doing business in the
Philippines derived from transport of passengers and
cargo from the Philippines to another country shall be
exempt from VAT; however they are still liable to a
 percentage tax of three percent (3%) based on their
gross receipts derived from transport of cargo from
the Philippines to another country as provided for in
Sec. 118 of the Tax Code, as amended); and
● Sale of power or fuel generated through renewable

sources of energy such as, but not limited to,

biomass, solar, wind, hydropower, geothermal and
steam, ocean energy, and other shipping sources
using technologies such as fuel cells and hydrogen
fuels; Provided, however that zero-rating shall apply
strictly to the sale of power or fuel generated through
renewable sources of energy, and shall not extend to
the sale of services related to the maintenance or
operation of plants generating said power.
The following sales by VAT-registered persons shall be
subject to zero percent (0%) rate:
● 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, paid 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. The sale of raw materials or packaging materials
to a non-resident buyer for delivery to as a
resident local export-oriented enterprise to be
used in manufacturing, processing, packing or
repacking in the Philippines of the said buyer's
goods, paid for in acceptable foreign currency,
and accounted for in accordance with the rules
and regulations of the BSP;
3. The sale of raw materials or packaging materials
to an export-oriented enterprise whose export
sales exceed seventy percent (70%) of total
annual production;
4. Transactions considered export sales under
Executive Order No. 226, otherwise known as the
Omnibus Investments Code of 1987, and other
special laws; and
5. The sale of goods, supplies, equipment and fuel
to persons engaged in international shipping or
 international air transport operations; Provided,
That the goods, supplies, equipment, and fuel
shall be used exclusively for international shipping
or air transport operations; Provided, that the
same is limited to goods, supplies, equipment and
fuel that shall be used in the transport of goods
and passengers from a port in the Philippines
directly to a foreign port, or vice-versa without
docking or stopping at any other port in the
Philippines unless the docking or stopping at any
other Philippine port is for the purpose of
unloading passengers and/or cargoes that
originated from abroad, or to load passengers
and/or cargoes bound for abroad;Provided,
further, that if any portion of such fuel, goods or
supplies is used for purposes other than the
mentioned in this paragraph, such portion of fuel,
goods and supplies shall be subject to twelve
percent (12%) output VAT.
● Sales to Persons or Entities Deemed Tax-exempt

under Special Law or International Agreement

Sale of goods or property to persons or entities who are
tax-exempt under special laws or international
agreements to which the Philippines is a signatory, such
as, Asian Development Bank (ADB), International Rice
Research Institute (IRRI), subject such sales to zero rate.
What are the transactions which are no longer subject
to zero-percent (0%)?
1. Sale of gold to BSP
2. Foreign-currency denominated sales
Upon the successful establishment and implementation
of an enhanced VAT refund system by the Department of
Finance (DOF), what are the transactions that will now be
subject to twelve percent (12%) and no longer be subject
to zero percent (0%)?
1. The sale of raw materials or packaging materials to a
non-resident 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, paid for in
acceptable foreign currency, and accounted for in
accordance with the rules and regulations of the BSP;
2. The sale of raw materials or packaging materials to an
export-oriented enterprise whose export sales
 exceed seventy percent (70%) of total annual
production;
3. Transactions considered export sales under Executive
Order No. 226, otherwise known as the Omnibus
Investments Code of 1987, and other special laws
4. 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);
and
5. 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.
What transactions are considered deemed sales?
The following transactions are considered as deemed
sales:
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. Transfer of
goods or properties not in the course of business can
take place when VAT-registered person withdraws goods
from his business for his personal use;
● Distribution or transfer to:
○ Shareholders or investors as share in the profits of

the VAT-registered person; or

○ Creditors in payment of debt or obligation
● Consignment of goods if actual sale is not made

within sixty (60) days following the date such goods

were consigned. Consigned goods returned by the
consignee within the 60-day period are not deemed
sold;
● Retirement from or cessation of business, with

respect to all goods on hand, whether capital goods,

stock-in-trade, supplies or materials as of the date of
such retirement or cessation, whether or not the
business is continued by the new owner or successor.
The following circumstances shall, among others,
give rise to transactions "deemed sale";
○ Change of ownership of the business. There is a

change in the ownership of the business when a

 single proprietorship incorporated; or the
proprietor of a single proprietorship sells his entire
business
○ Dissolution of a partnership and creation of a new

partnership which takes over the business.

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.
What are the VAT-exempt transactions?
● 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 genetic materials therefore;
● 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
 considered as pets);
● Importation of personal and household effects
belonging to residents of the Philippines returning
from abroad and non-resident citizens coming to
resettle in the Philippines; Provided, that such goods
are exempt from custom duties under the Tariff and
Customs Code of the Philippines;
● Importation of professional instruments and
implements, tools of trade, occupation or
employment, wearing apparel, domestic animals, and
personal and household effects ( except vehicles,
vessels, aircrafts machineries and other similar goods
for use in manufacture which are subject to duties,
taxes and other charges) belonging to persons
coming to settle in the Philippines or Filipinos or their
families and descendants who are now residents or
citizens of other countries, such parties hereinafter
referred to as 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 barter or sale, accompanying such persons,
or arriving within a reasonable time; Provided, That
 the Bureau of Customs may, upon the production of
satisfactorily evidence that such persons are actually
coming to settle in the Philippines and that the goods
are brought from their place of residence, exempt
such goods from payment of duties and taxes.
● Services subject to percentage tax under Title V of
the Tax Code, as amended;
● Services by agricultural contract growers and milling
for others of palay into rice, corn into grits, and sugar
cane into raw sugar;
● Medical, dental, hospital and veterinary services
except those rendered by professionals;
● Educational services rendered by private educational
institutions duly accredited by the Department of
Education (DepED), the Commission on Higher
Education (CHED) and the Technical Education and
Skills Development Authority (TESDA) and those
rendered by the government educational institutions;
● Services rendered by individuals pursuant to an
employer-employee relationship;
● 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;
● Transactions which are exempt under international
agreements to which the Philippines is a signatory or
under special laws except those granted under P.D.
No. 529 - Petroleum Exploration Concessionaires
under the Petroleum Act of 1949;
● Sales by agricultural cooperatives duly registered and
in good standing with the Cooperative Development
Authority (CDA) to their members, as well as 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;
● Gross receipts from lending activities by credit or
multi-purpose cooperatives duly registered 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 CDA; Provided, that the share capital
contribution of each member does not exceed Fifteen
Thousand Pesos (P15,000.00) and regardless of the
aggregate capital and net surplus ratably distributed
among the members;
● Export sales by persons who are not VAT-registered;
● The following sales of real properties:
○ Sale of real properties not primarily held for sale to

customers or held for lease in the ordinary course

of trade or business.
○ Sale of real properties utilized for low-cost

housing as defined by RA No. 7279, otherwise

known as the "Urban Development and Housing
Act of 1992" and other related laws, such as RA
No. 7835 and RA No. 8763;
○ Sale of real properties utilized for specialized

housing as defined under RA No. 7279, and other

related laws, such as RA No. 7835 and RA No.
8763, wherein price ceiling per unit is Php
 450,000.00 or as may from time to time be
determined by the HUDCC and the NEDA and
other related laws;
○ Sale of residential lot valued at One Million Five

Hundred Thousand Pesos (P1,500,000.00) and

below, or house and lot and other residential
dwellings valued at Two Million Five Hundred
Thousand Pesos (P2,500,000.00) and below, as
adjusted using latest Consumer Price Index
values.   (If two or more adjacent lots are sold or
disposed in favor of one buyer, for the purpose of
utilizing the lots as one residential lot, the sale
shall be exempt from VAT only if the aggregate
value of the lots do not exceed One Million Five
Hundred Thousand Pesos (P1,500,000.00). 
Adjacent residential lots, although covered by
separate titles and/or separate tax declarations,
when sold or disposed to one and the same buyer,
whether covered by one or separate Deed of
Conveyance, shall be presumed as a sale of one
residential lot.)
● Lease of residential units with a monthly rental per
●

unit not exceeding Fifteen Thousand Pesos

(P15,000.00), regardless of the amount of aggregate
rentals received by the lessor during the year;
Provided, that not later than January 31, 2009 and
every three (3) years thereafter, the amount of
P10,000.00 shall be adjusted to its present value
using the Consumer Price Index, as published by the
Philippine Statistics Authority (Formerly known as
NSO);
● 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;
● Transport of passengers by international carriers;
● Sale, importation or lease of passenger or cargo
vessels and aircraft, including engine equipment and
spare parts thereof for domestic or international
transport perations; Provided, that the exemption
from VAT on the importation and local purchase of
passenger and/or cargo vessels shall be subject to
the requirements on restriction on vessel importation
 and mandatory vessel retirement program of Maritime
Industry Authority (MARINA);
● Importation of fuel, goods and supplies by persons
engaged in international shipping or air transport
operations; Provided, that the said fuel, goods and
supplies shall be used exclusively or shall pertain to
the transport of goods and/or passenger from a port
in the Philippines directly to a foreign port, or vice-
versa, without docking or stopping at any other port
in the Philippines unless the docking or stopping at
any other Philippine port is for the purpose of
unloading passengers and/or cargoes that originated
form abroad, or to load passengers and/or cargoes
bound for abroad; Provided, further, that if any portion
of such fuel, goods or supplies is used for purposes
other that the mentioned in the paragraph, such
portion of fuel, goods and supplies shall be subject to
12% VAT;
● Services of banks, non-bank financial intermediaries
performing quasi-banking functions, and other non-
bank financial intermediaries, such as money
changers and pawnshops, subject to percentage tax
 under Sections 121 and 122, respectively of the Tax
Code; and
● Sale or lease of goods and services to senior citizens
and persons with disabilities, as provided under
Republic Act Nos. 9994 (Expanded Senior Citizens
Act of 2010) and 10754 (An Act Expanding the
Benefits and Privileges of Persons with Disability),
respectively;
● Transfer of property in merger or consolidation
(pursuant to Section 40(C)(2) of the Tax Code, as
amended);
● Association dues, membership fees, and other
assessments and charges collected on a purely
reimbursement basis by homeowners’ associations
and condominium established under Republic Act No.
9904 (Magna Carta for Homeowners and
Homeowner’s Association) and Republic Act No.
4726 (The Condominium Act), respectively;
● Sale of gold to the Banko Sentral ng Pilipinasn (BSP)
(previously zero-rated transaction);
● Sale of drugs and medicines prescribed for diabetes,
high cholesterol, and hypertension (beginning on
 January 1, 2019 as determined by the Department of
Health); and
● 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 do not exceed the
amount of Three Million Pesos (Php 3,000,000.00). 
Note: Self-employed individuals and professionals
availing of the 8% on gross sales and/or receipts and
other non-operating income, under Sections 24 (A)
(2)(b) and 24 (A)(2)(c)(2) of the NIRC shall also be
exempt from the payment of twelve (12%) VAT.
What is the difference between a low-cost and a
socialized housing?
“Low-cost housing” refers to housing projects intended
for homeless low-income family beneficiaries,
undertaken by the Government or private developers,
which may either be a subdivision or a condominium
registered and licensed by the Housing and Land Use
Regulatory Board/Housing (HLURB) under BP Blg. 220,
PD No. 957 or any other similar law, wherein the unit
selling price is within the selling price per unit as set by
the Housing and Urban Development Coordinating
Council (HUDCC) pursuant to RA No. 7279 otherwise
known as the “Urban Development and Housing Act of
1992” and other laws.
“Socialized housing” refers to housing programs and
projects covering houses and lots or home lots only
undertaken by the Government or private sector for the
underprivileged and homeless citizens which shall
include sites and services development, long-term
financing, liberated terms on interest payments, and such
other benefits in accordance with the provision or RA No.
7279, otherwise known as the “Urban Development and
Housing Act of 1992” and RA No. 7835 and RA No.
8763.  It shall also refer to projects intended for the
underprivileged and homeless wherein the housing
package selling price is within the lowest interest rates
under the Unified Lending Program (UHLP) or any
equivalent housing program of the Government, the
private sector or non-government organizations.

II.   RELIEF-Related Queries

What is "RELIEF"?
RELIEF means Reconciliation of Listing 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.
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 (P2,500,000.00) are required to submit a
Summary List of Sales.
Who are required to submit Summary List of
Purchases?
VAT taxpayers with quarterly total purchases (net of VAT)
of goods and services, including importation exceeding
One Million Pesos (P1,000,000.00) are required to
submit Summary List of Purchases.
What are the Summary Lists required to be
submitted?
● Quarterly Summary List of Sales to Regular Buyers/

Customers Casual Buyers/ Customers and Output

Tax
 ● Quarterly Summary of List of Local Purchases and
Input tax; and
● Quarterly Summary List of Importation.

When is the deadline for submission of the above

Summary Lists?
The Summary List of Sales/Purchases, whichever is
applicable, shall be submitted on or before the twenty-
fifth (25th) day of the month following the close of the
taxable quarter -- calendar quarter or fiscal quarter.
What are the penalties for failure to submit the
Summary Lists?
● For failure to file, keep or supply a statement, list or

information required on the date prescribed shall pay

and administrative penalty of One Thousand Pesos
(P1,000.00) for each such failure, unless it is shown
that such failure is due to reasonable cause and not to
willful neglect; and
● An aggregate amount to be imposed for all such

failures during a taxable year shall not exceed

Twenty-Five Thousand Pesos (P25,000.00).

III.   What is the treatment for Withholding of VAT on

Government Money Payments?
The government or any of its political subdivisions,
instrumentalities or agencies, including government-
owned or controlled corporations (GOCCs) shall, before
making payment on account of each purchase of goods
and/or services taxed at twelve percent (12%) VAT
pursuant to Sections 106 and 108 of the Tax Code,
deduct and withhold a Final VAT due at the rate of five
percent (5%) of the gross payment.
The five percent (5%) final VAT withholding rate shall
represent the net VAT payable of the seller. The
remaining seven percent (7%) effectively accounts for
the standard input VAT for sales of goods or services to
government or any of its political subdivisions,
instrumentalities or agencies including GOCCs in lieu of
the actual input VAT directly attributable or ratably
apportioned to such sales. Should actual input VAT
attributable to sales to government exceed seven percent
(7%) of gross payments, the excess may form part of the
sellers' expense or cost. On the other hand, if actual input
VAT attributable to sale to government is less than seven
percent (7%) of gross payment, the difference must be
closed to expense or cost.
The government or any of its political subdivisions,
instrumentalities or agencies including GOCCs, as well
as private corporation, individuals, estates and trusts,
whether large or non-large taxpayers, shall withhold
twelve percent (12%) VAT with respect to the following
payments:
Lease or use of properties or property rights owned by
non-residents; and
Other services rendered in the Philippines by non-
residents.

IV.   In what grounds can the Commissioner of Internal

Revenue suspend the business operations of a
taxpayer?
The Commissioner or his authorized representative is
empowered to suspend the business operations and
temporarily close the business establishment of any
person for any of the following violations:
● In the case of a VAT-registered Person:
○ Failure to issue receipts or invoices;
○ Failure to file a value-added-tax return as required
 ○

under Section 114; or

○ Understatement of taxable sales or receipts by

thirty percent (30%) or more of his correct taxable

sales or receipts for the taxable quarter.
● Failure to any Person to Register as Required under

Section 236
○ The temporary closure of the establishment shall

be for the duration of not less than five (5) days

and shall be lifted only upon compliance with
whatever requirements prescribed by the
Commissioner in the closure order.
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