Professional Documents
Culture Documents
Vat
Vat
Taxation Law
GENERAL PRINCIPLES
VAT is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties or services
in the Philippines and on importation of goods into the Philippines.
1.
2.
3.
4.
5.
6.
7.
8.
9.
It is an indirect tax;
It is a tax on value added of the taxpayer;
It is a transparent form of sales tax;
It is a broad-based tax on consumption of goods, properties or service in the Philippines;
It is collected through the tax credit method;
There is no cascading (tax on tax) under the VAT system;
VAT lost in the early stages may be recovered under the catching-up principle or under the recoupment
principle;
It adopts the tax-inclusive method;
It follows the destination principle
INPUT TAX the VAT due from or paid by a VAT registered person in the course of his trade or business of
importation of goods or local purchase of goods or services, including lease or use of property, from a VATregistered person. It includes the transitional input tax and the presumptive input tax.
OUTPUT TAX the VAT due on the ale or lease of taxable goods or properties or services by any person
registered or required to register under VAT
CROSS BORDER DOCTRINE (Destination Principle) mandates that no VAT shall be imposed to form
part of the cost of the goods destined for consumption outside the territorial border of the taxing authority.
Goods and services are taxed only in the country where these are consumed.
TRANSACTIONS COVERED BY VAT (CESI)
1. Sale of Commodities or Goods (in the course of trade or business)
2. Exportation (in the course of trade or business)
3. Sale of Services (in the course of trade or business)
4. Importation (whether or not in the course or trade or business)
Any person who:
1. Sells, barters, exchanges, leases goods or properties in the course of trade or business;
2. Renders services in the course of trade r business (including professional services); and
3. Imports goods whether or not in the course of trade or business;
4. Buys or is the transferee of goods imported into the Philippines by a VAT exempt person wherein the
buyer shall be deemed the importer;
5. Whose gross sales or gross receipts is over the threshold fixed by law or regulations (only those with
specific thresholds)
IN THE COURSE OF TRADE OR BUSINESS - 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, non-profit private organization (irrespective of the disposition of its net
income and whether or not it sells exclusively to members or their guests); or government entity.
I.
Services rendered in the Philippines by non-resident foreign persons shall be considered as being in the
course of trade or business.
VAT ON SALE OF GOODS OR PROPERTIES
TAX BASE AND TAX RATE: 12% of the gross selling price or gross value in money of the goods or
properties sold, bartered or exchanged, such tax to be paid by the seller or transferor.
MEANING OF GROSS SELLING PRICE the total amount of money or its equivalent which the purchaser
pays or is obligated to pay, including any excise tax, to the seller in consideration of the sale, barter or
exchange of the goods or properties, excluding VAT. (Section 106, NIRC)
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Sale of Real Property on Installment Plan the real estate dealer shall be subject to VAT on
installment payments, including interest and penalties, actually and/or constructively received by the
seller.
SALE OF REAL PROPERTY ON INSTALLMENT PLAN sale of real property by a real estate dealer, the
initial payments of which in the year of the sale do not exceed twenty-five percent (25%) of the gross selling
price.
GROSS SELLING PRICE (in case of sale or exchange of real property) the consideration stated in the
sales document or the fair market value whichever is higher. If the VAT is not billed separately in the
document of sale, the selling price or the consideration stated therein shall be deemed to be inclusive of
VAT.
II.
Sale of Real Property on a Deferred Payment Basis (Not On Installment Plan) the
transaction shall be treated as cash sale which makes the entire selling price taxable in the month of the
sale.
SALE OF RELA PROPERTY ON A DEFERRED BASIS sale of real property, the initial payments of which
in the year of the sale exceed twenty-five percent (25%) of the gross selling price.
INITIAL PAYMENTS payment or payments which the seller receives before or upon execution of the
instrument of sale and payments which he expects or is scheduled to receive in cash or property (other than
evidence of indebtedness of the purchaser) during the year when the sale or disposition of real property was
made.
INSTALLMEN
T PLAN
Initial payments do not
exceed 25% of the
gross selling price
Seller shall be subject
to output VAT on the
installment payments
received, including the
DEFERRED PLAN
Initial
payments
exceed 25% of the
gross selling price
Transaction shall be
treated as cash sale
which
makes
the
entire selling price
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TAX BASE AND TAX RATE: 12% of the gross receipts derived from the sale or exchange of services,
including the use or lease of properties.
GROSS RECEIPTS refers to the total amount of money or its equivalent representing the contract price,
compensation, service fee, rental or royalty, including the amount charged for materials supplied with the
services rendered and advance payments actually or constructively received during the taxable period for
the services performed or to be performed for another person, excluding VAT.
CONSTRUCTIVE RECEIPT occurs when the money consideration or its equivalent is placed at the control
of the person who rendered the service without restrictions by the payor.
VICES
The term sale or exchange of services means the performance of all kinds of services in the Philippines for
a fee, remuneration or consideration, whether in kind or in cash (please refer to Sec. 108 NIRC or RR. No.
16-2005 for the complete list)
1.
2.
3.
4.
Professional/technical consultancy;
Transfer of technology;
Lease or use of intangible property; or
Lease or use of tangible property
LEGAL SERVICES
Are lawyers liable for VAT?
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YES. RA 9337 clearly provided that sale of legal services by a lawyer or a law firm shall be subject to VAT
effective November 1, 2005. There was an elimination of the exemption from VAT of legal services, deleting
the old Section 109 (BB) of RA 9238.
An individual can practice his law profession either personally or through general professional partnership. A
lawyer who practices his profession may be subject to or exempt from VAT
A LAWYER PRACTICING HIS PROFESSION IS SUBJECT TO VAT IF:
1. There is no employer-employee relationship between him and the person to whom he provides the legal
service; and
2. His gross receipts for the next 12 months exceed P1.5 million
Otherwise, he is exempt from VAT
TAX BASE AND TAX RATE: 12% of the gross receipts derived from the sale or exchange of services,
including the use or lease of properties.
The effectivity date of the increase in VAT rate from 10% to 12% is February 1, 2006.
III.
Same rule applies to technical importation of goods sold by a person located in a Special Economic
Zone to a customer located in a customs territory (R.R. No. 16-2005 Sec. 4.107-1).
The VAT on importation shall be paid by the importer prior to the release of such goods from
customs custody
IMPORTER refers to any person who brings goods into the Philippines, whether or not made in the course
of trade or business. It includes non-exempt persons or entities who acquire tax-free imported goods from
exempt persons, entities or agencies.
TRANSFER OF GOODS BY TAX-EXEMPT PERSON
Where the importer is exempt from VAT and such goods imported were subsequently sold, transferred or
exchanged in the Philippines to a non-exempt person or entity, the non-exempt purchaser, transferee or
recipient shall be considered as the importer and shall be liable for VAT due on such importation.
Technical Importation Sale of goods by a PEZA registered enterprise, to a buyer from the customs
territory shall be treated as a technical importation. Such buyer shall be treated as an importer thereof and
shall be imposed with the corresponding import taxes
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ZERO-RATED SALES
I.
1.
Foreign Currency Denominated Sales means the sale to non-resident of automobiles (Sec. 149
NIRC) and non-essential goods (Sec. 150 NIRC), assembled or manufactured in the Philippines for
delivery to a resident in the Philippines, paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the BSP.
3. Sales to Persons or Entities deemed tax-exempt under Special Law or International Agreement
Such as the Asian Development Bank (ADB) and international Rice Research Institute (IRRI) which shall be
effectively subject to zero-rate.
II.
1.
2.
3.
4.
5.
6.
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7.
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 emerging sources
using technologies such as fuel cells and hydrogen fuels;
The sale of power or fuel is the one being subject to 0% and not the operation or maintenance of such
energy sources.
EFFECTIVELY ZERO-RATED
SALES
Refers to the local sale of goods, properties, or services by a VAT-registered person to a person or entity
who was granted indirect tax exemption under special laws or international agreements.
AUTOMATICALL
Y ZERO-RATED
EFFECTIVELY
ZERO-RATED
Effectively
zerorated sales shall
refer to the local
sale of goods,
properties,
or
services by a VATregistered person
to a person or
entity who was
granted indirect tax
exemption under
special laws, or
international
agreements.
An application for
zero-rating must be
filed and the BIR
approval
is
necessary before
the
transaction
may be considered
effectively
zerorated
Results in no tax chargeable against the
purchaser
The seller an claim a refund of or a tax credit
certificate for the VAT previously charged by
suppliers.
NOTE: For zero-rated transactions, whether automatic of effective, the word ZERO-RATED must be
prominently imprinted or stamped on the face of the VAT invoice or receipt to be issued by the seller,
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otherwise, the transaction becomes subject to the regular VAT rate. This requirement prevents the buyer
from claiming input tax credits arising from such taxable sale.
VAT-EXEMPT TRANSACTIONS
These refer to the sale of goods or properties and/or services and the use or lease of properties that s NOT
subject to output tax and the seller is NOT allowed any tax credit of input tax on purchases:
1.
Sale or importation of agricultural and marine food products in their original state
Original state even if they have undergone the simple process of preparation or preservation for the
market such as freezing, drying, salting, broiling, roasting, smoking or stripping.
Not a simple process if it is a physical or chemical process which would alter the exterior or inner
substance of a product in such a manner as to prepare it for special use to which it could not have
been put in its original form or condition; like the addition of preservatives or anti-oxidants.
Polished and/or husked rice, corn grits, raw cane sugar and molasses and ordinary salt shall be
considered in their 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;
EXCEPTION: specially made 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 residents of the Philippines returning from
abroad and non-resident citizen coming to resettle in the Philippines. PROVIDED, that such goods are
exempt from customs duty under the Tariff and Customs Code of the Philippines;
4.
Importation of professional instruments and implements, wearing apparel, domestic animals, and
personal household effects
Requisites to be VAT-Exempt:
a. belonging to persons coming to settle in the Philippines
b. for their own use and not for sale, barter or exchange
c. accompanying such persons or arriving within 90 days before or after their arrival
d. satisfactory evidence is given to the CIR that such persons are actually coming to settle in the
Philippines and that the change of residence is bona fide
e. except any vehicle, vessel, aircraft, machinery, other goods for use in the manufacture and
merchandise of any kind in commercial quantity
5.
6.
Services by agricultural contract growers and milling fo others of palay into rice, corn into grits and
sugar cane into raw sugar;
7.
Medical, dental, hospital and veterinary services except those rendered by professionals;
Laboratory services are exempted. If the hospital operates a pharmacy or drugstore, the sale of
drugs and medicine is subject to VAT
8.
Educational services rendered by private educational institutions duly accredited by the DepED, CHED
and TESDA and those rendered by government educational institutions;
9.
10. Services rendered by regional or area headquarters established in the Philippines by multinational
corporations;
11. Transactions which are exempt under international agreements to which the Philippines is a signatory
or under special laws except those under Presidential Decree No. 529 (Petroleum Exploration
Concessionaires under the Petroleum Act of 1949);
Page 7 of 15
12. Sales by agricultural cooperatives duly registered and in good standing with the Cooperative
Development Authority (CDA) to:
Non-members only if the cooperative is the producer, whether in its original state or processed
form
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 shall also be
exempt.
Note: Sale or importation of agricultural food products in their original state is exempt from VAT
irrespective of the seller and buyer thereof.
13. Gross receipts from lending activities of credit or multi-purpose cooperatives duly registered and in good
standing with the CDA;
14. Sales by non-agricultural, non-electrical and non-credit cooperatives duly registered and in good
standing with the CDA. PROVIDED: that the share capital contribution of each member does not
exceed P 15,000 and regardless of the aggregate capital and net surplus ratably distributed among the
members.
Importation by these cooperatives of machineries and equipment, including spare parts thereof, to
be used by them are subject to VAT
15. Export sales by persons who are not VAT registered;
To encourage exporters of goods to register as a VAT person with the BIR to be able to claim
unused input tax in the form of refund or tax credit
16. Sale of real properties:
Sales Exempted:
a. Not primarily held for sale to customers or held for lease in the ordinary course of trade or
business;
b. Utilized for low-cost housing;
c. Utilized for socialized housing;
d. Residential lot valued at P 1.5 million and below;
e. House and lot and other residential dwellings valued at P 2.5 million and below; or
f. Two or more adjacent residential lots where the aggregate value does not exceed P 1.5 million
Even if the real property is not primarily held for sale to customers or held for sale to
customers or held for lease in the ordinary course of trade or business but the same is
used in the trade or business of the seller, the sale thereof shall be subject to VAT being a
transaction incidental to the taxpayers main business (Sec. 14, R.R. 04-2007)
17. Lease of residential units, if the monthly rent:
Does not exceed P10,000 regardless of the aggregate rentals received by the lessor
Exceeds P10,000 but the aggregate rentals received by the lessor do not exceed P 1.5 million,
however, the same shall be subject to 3% percentage tax;
18. 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;
19. Sale, importation or lease of passenger or cargo vessels, and aircraft, including engine, equipment and
spare parts thereof for domestic or international transport operations weighing 150 tons and above;
20. Importation of life-saving equipment safety and rescue equipment and communication and navigational
safety equipment steel plates and other metal plates used for shipping transport operations;
21. Importation f capital equipment machinery, spare parts, lifesaving and navigational equipment, steel
plates and other metal plates to be used in the construction, repair, renovation or alteration of any
merchant marine vessel operated or to be operated in the domestic trade;
22. Importation of fuel, goods and supplies by persons engaged in international shipping or air transport
operations directly to a foreign port without stopping at any other port in the Philippines;
Page 8 of 15
23. Services of banks, non-bank financial intermediaries performing quasi-banking functions, and other
non-bank financial intermediaries such as money changers and pawnshops;
24. 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 P1,500,000.
NOTE: This exemption does not apply to the preceding paragraphs except to the sale of real properties
and lease of residential units. It refers to transactions undertaken by VATable entities but because their
gross annual sales and/or receipts do not exceed P1.5 million, they are exempt from VAT.
Requisites
a. the transaction is VATable;
b. said transaction does not fall under any of the other exemptions (except for sale of real properties
and lease of residential units);
c. the gross receipts and/or annual sales must not exceed P 1.5 million
NOTE: A VAT-registered person may elect that the exemption shall not apply to his sales of goods,
properties or service. Once the election is made, it shall be irrevocable or a period of 3 years counted
from the quarter when the election was made, except for franchise grantees of radio and TV
broadcasting whose annual gross receipts for the preceding year do not exceed P10 million where the
option becomes perpetually irrevocable. (R.R. No. 4-2007)
Rationale: The VAT exempt person may incur a large amount of input tax in excess of his output tax,
and such input tax can be credited against any tax under the NIRC.
Distinction between Zero-Rated Sales and VAT-Exempt Sales
ZERO-RATED
SALES
VAT-EXEMPT SALES
The
transaction
is
completely free of VAT
because the tax rate
applied on the tax base
is zero, hence, the
seller
charges
no
output tax
VAT payer can claim
and enjoy a credit or
refund for the input tax
(total relief)
Exemption
only
removes the VAT at the
exempt stage
Still considered as
taxable sales for the
purpose of measuring
turnover sales VAT
registration is required
VAT payer
cannot
claim a credit or tax
(which could result to
increased prices of
goods or services;
partial relief)
Not considered as
taxable sales; A person
who
makes
only
exempt sales is not a
taxable person for VAT
purposes and may not
register for VAT
VAT registration is
optional
Page 9 of 15
EXEMPT
TRANSACTIO
N
Involves
goods
or
services which, by their
nature, are specifically
listed in and expressly
exempted from the VAT
under the Tax Code,
without regard to the
tax status VAT
exempt or not of the
party to the transaction
Transaction
is
not
subject to the VAT, but
the seller is not allowed
any tax refund of or
credit for any input
taxes paid
EXEMPT PARTY
A person or entity
granted
VAT
exemption under the
Tax Code, a special
law or an international
agreement to which
the Philippines is a
signatory,
and
by
virtue of which its
taxable transactions
become exempt from
the VAT
Such party is also not
subject to the VAT, vut
may be allowed a tax
refund of or credit for
input
taxes
paid,
depending
on
its
registration as a VAT
or non-VAT taxpayer
TAX CREDITS
Any input tax on the following transactions evidenced by a VAR invoice or official receipt issued by a VATregistered person shall be creditable against output tax:
VAT actually paid for: (IRST3P)
1. Purchase or importation of goods:
a. For sale; or
b. For conversion into or intended to form part of a finished product for sale, including packaging
materials; or
c. For use as supplies in the course of business; or
d. For use as raw materials supplied in the sale of services; or
e. For use in trade or business for which deduction for depreciation or amortization is allowed for
income tax purposes (capital goods)
2. Purchase of real properties;
3. Purchase of services;
4. Transactions deemed sale;
5. Transitional input tax;
6. Presumptive input tax;
7. Transitional input tax credits allowed under transitory and other provisions
1.
2.
3.
Importer upon payment of VAT prior to the release of goods from customs custody; or
Purchaser of he domestic goods or properties upon consummation of the sale; or
Purchaser of services or the lessee or licensee upon payment of the compensation, rental, royalty or
fee.
TAX FORMULA:
Output Tax
Less: Input Tax
----------------------------Value-Added Payable
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If the amount of input tax is greater than the amount of output tax, the resulting amount is treated
as Tax credit or Refund
How is Input tax creditable during the taxable month or quarter determined? (R.R. NO. 16-2005, SEC.
4.110-5)
Adding all creditable input taxes during the month or quarter plus any amount of input tax carried-over from
the preceding month or quarter, reduced by the amount of claim for VAT refund or tax credit certificate
(whether filed with BIR, with Department of Finance, Board of Investments or the BOC) and other
adjustments, such as purchase returns or allowances, input tax attributable to exempt sales and input tax
attributable to sales subject to final VAT withholding.
Determination of Output Tax and VAT Payable or Excess Tax Credits (R.R. No. 16-2005, Sec. 4110-6)
1. Output Tax
a. Output tax is determined by multiplying the gross selling price or gross receipts by the VAT rate.
b. Where the basis for computing output tax is either the gross selling price or gross receipts, but the
amount of VAT is erroneously billed in the invoice, the total invoice amount is presumed to be
comprising of gross selling price/gross receipts plus the correct VAT. Hence, the output tax is
determined by multiplying the total invoice amount by fraction using rate of VAT as numerator and
100% plus VAT rate as denominator.
c. The input tax that can be claimed by the buyer shall be the corrected amount of VAT.
2. VAT Payable
Output tax less input tax to arrive at VAT payable on a monthly VAT declaration and the quarterly VAT
returns, subject to limitations prescribed by the regulations.
Vat Payable in Excess Output Or Excess Input Tax
1.
2.
If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the
VAT-registered person (R.R. No. 16-2005, Sec. 4. 110-7).
If the input tax inclusive of input tax carried over from the previous quarter exceeds the output tax, the
excess input tax shall be carried over to the succeeding quarter or quarters;
Any input tax attributable to zero-rated sales by a VAT-registered person may at his option be
refunded or applied for a tax credit certificate which may be used in the payment of internal
revenue taxes, subject to the limitations as may be provided for by law, as well as, other
implementing rules (R.R. No. 16-2005, Sec. 4.110-7 as amended by R.R. No. 2-2007, Sec.
R.A. No. 9361 amended Sec. 110(B) NIRC removing the 70% cap on creditable input tax.
TRANSITIONAL INPUT
TAX
Transitional input tax on the inventory on hand as of the effectivity of the VAT registration of:
1. Taxpayers who became VAT-registered persons upon exceeding the minimum turnover of P1.5 million
in any 12-month period; or
2. Voluntarily registers as a VAT payer even if turnover does not exceed P 1.5 million
3. Whichever is higher between:
a. 2% of the value of the beginning inventory on hand; or
b. Actual VAT paid on such goods, materials and supplies
The amount is creditable against the output tax of a VAT-registered person.
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The presumptive input tax shall be 4% of the gross value in money of their purchases of primary agricultural
products which are used as inputs to their production.
The amount is creditable against the output tax of a VAT-registered person.
CLAIMS FOR REFUN/TAX CREDIT CERTIFICATE OF INPUT TAX
1.
2.
3.
REGISTRATION
PERSONS REQUIRED TO REGISTER FOR VALUE-ADDED TAX:
1. Mandatory: Any person who in the course of trade of business, sells, barters, or exchanges of services,
is required to register if;
Gross sales or receipts for the past twelve (12) months have exceeded P1.5 M; or
There is reasonable grounds to believe that his gross sales or receipts for the next 12 months will
exceed P 1.5 M.
2. Optional: Any person not required to registered for VAT may elect to register by paying the annual
registration fee.
Any person who elected to register shall not be entitled to cancel his registration for the next three
years.
COMPLIANCE
REQUIREMENTS
Page 12 of 15
INVOICING
REQUIREMENTS
A VAT-registered person shall issue:
1. VAT invoice for every sale, barter or exchange of goods or services.
2. VAT official receipt for every lease of goods or properties and for every sale, barter or exchange of
services.
INFORMATION CONTAINED IN VAT INVOICE OR RECEIPT
1. Statement that the seller is a VAT-registered person followed by his T.I.N.
2. The total amount paid by the purchaser with the indication that such amount includes VAT.
If the sale is exempt, the term VAT-EXEMPT SALE must be written or printed prominently on the
invoice or receipt.
If the sale is subject to 0%, the term ZERO-RATED SALE must be written or printed prominently on
the invoice or receipt.
If the sale involves goods, properties or services some which are subject to VAT and some are
exempt or zero-rated, the breakdown of the sale price between it taxable, exempt, and zero-rated
components must be shown on the invoice or receipt.
3. Date of the transaction, quantity, unit cost and description of goods.
4. In case os sales in the amount of P1,000.00 or more and the sale is made to a VAT-registered person,
the name, business style, address and TIN of the purchaser.
CONSEQUENCES ERRONEOUS ISSUANCE OF VAT INVOICE OR RECEIPT
If a person who is not VAT-registered issues an invoice or receipt showing his TIN, followed by the word
VAT:, the erroneous issuance shall result to the following:
1. The non-VAT person shall be liable to:
a. The percentage taxes applicable to his transactions;
b. VAT due on transactions under Sec 106 or 108 of the Tax Code, without the benefit of any input tax
credit; and
c. A 50% surcharge under Sec. 248(B) of the Tax Code
2. VAT shall be recognized as an input tax credit to the purchaser, provided the requisite information is
shown on the receipt or invoice.
Professional Practitioners (PPs) were formerly classified as non-VAT taxpayers and were exempt
from VAT and Percentage taxes under Section 109 NIRC 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 were also subject
to either VAT or 3% Percentage Tax.
Pursuant to Revenue Regulations No. 16-2005, services of Professional Practitioners are subject
to:
a.
VAT if the gross professional fees exceed P 1.5 million for a
12-month period; or
Page 13 of 15
b.
Every person liable to pay VAT shall file a quarterly return of the amount of his quarterly gross sales or
receipts within 25 days following the close of the taxable quarter.
A VAT-registered person shall pay the value-added tax on a monthly basis
Taxable quarter shall mean the quarter that is synchronized to the income tax quarter of the taxpayer
(i.e. calendar or fiscal year).
SUSPENSION OF BUSINESS
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:
1. In the case of a VAT-registered person
a. Failure to issue receipts or invoices;
b. Failure to file a VAT return as required; or
c. Understatement of taxable sales or receipts by 30% or more of his correct taxable sales or receipts
for the taxable quarter, and
2. For failure of any person to register as required in Section 236
The temporary closure of the establishment for the duration of not less than 5 days shall be lifted only upon
compliance with whatever requirements prescribed by the CIR in the closure order.
EXCEPTION: For exporters, although they are required to be VAT-registered, non-registration will not
amount to temporary closure but the penalty shall be that they will be considered as exempt from VAT,
instead of being subject to 0% percent
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