Business Tax: Value-Added Tax (VAT Subject Transactions) The phrase “in the course of trade or business” means

means the
regular conduct or pursuit of a commercial or an
Value-Added Tax
economic activity including transactions incidental
Value-added tax (VAT) is a consumption tax on goods thereto, by any person regardless of whether or not the
and services that is levied at each stage of the supply person engaged therein is a nonstock, nonprofit private
chain where value is added, from initial production to the organization (irrespective of the disposition of its net
point of sale. The amount of VAT the user pays is based on income and whether or not it sells exclusively to members
the cost of the product minus any costs of materials in the or their guests), or government entity.
product that have already been taxed at a previous
The rule of regularity, to the contrary notwithstanding,
stage.
services as defined in the Tax Code in the Philippines by
nonresident foreign persons shall be considered as being
rendered in the course of trade or business.
VAT on Sale of Goods
The term “gross selling price” means the total
amount of money or its equivalent which the purchaser
pays or is obligated to pay to the seller in consideration of
Classification of VAT Transactions: the sale, barter or exchange of the goods or properties,
excluding the value-added tax.
VAT Rate
The excise tax, if any, on such goods or properties
a. VAT Subject Transactions 12%
shall form part of the gross selling price
b. Zero-Rated Transactions 0%
In computing the taxable base during the month or
c. VAT Exempt Transactions Exempt quarter, the following shall be allowed as deductions from
gross selling price:
VAT subject Transactions:
a. Discounts determined and granted at the time of sale
which are expressly indicated in the invoice, the amount
thereof forming part of the gross sales duly recorded in the
books of accounts.
Sales discount indicated in the invoice at the time of sale,
the grant of which is not dependent upon the happening
of a future event, may be excluded from the gross sales
within the same month/ quarter it was given.
b. Sales returns and allowances for which a proper credit
or refund was made during the month or quarter to the
buyer for sales previously recorded as taxable sales.
VAT on Sale of Goods
VAT on Sale of Real Properties
VAT on Sale of Real Properties
ON INSTALLMENT PLAN (ON CASH BASIS OR DEFERRED
PAYMENT PLAN (INITIAL PAYMENTS EXCEEDING 25% OF THE
GROSS SELLING PRICE))
If this is the case, the whole gross selling price become
taxable.
Tax base:
Selling price stated in the sales documents or fair market
value, whichever is higher
VAT on Sale of Services
The term “gross receipts” means the total amount of
money or its equivalent representing the contract price,
compensation, service fee, rental royalty, including the
amount charged for materials supplied with the services
and deposits and advanced payments actually or
constructively received during the taxable quarter for the
services performed or to be performed for another person,
excluding value-added tax.
VAT on Sale of Services
For dealer in securities, the term “gross receipts” means
gross selling price less cost of the securities sold.
VAT on Sale of Services
GROSS RECEIPTS ON THE SALE OF ELECTRICITY BY
GENERATION, TRANSMISSION AND DISTRIBUTION
COMPANIES
Gross receipts shall refer to the following:
a. Total amounts charged by generation companies
for the sale of electricity and related ancillary
services
b. Total amount charged by transmission by any entity
including National Grid Corporation of the
Philippines (NGCP) for transmission of electricity and
related ancillary services
c. Total amount charged by distribution companies
and electric cooperatives for distribution and supply
of electricity and related electric service. The
universal charge passed on and collected by
distribution companies and electric cooperatives
shall be excluded from the computation of the
Gross Receipts
Sale of electricity by generation, transmission by any entity
including the National Grid Corporation of the Philippines
(NGCP), and distribution companies including electric
cooperatives shall be subject to 12% VAT on their gross
receipts
VAT on Sale of Services
GROSS RECEIPT FROM NONLIFE INSURANCE COMPANIES
Tax Base:
Total premiums collected, whether paid in money, notes,
credits or any substitute for money
VAT on Importation
WHEN IMPORTATION BEGINS AND DEEMED TERMINATED
Importation begins when the carrying vessel or aircraft
enters the jurisdiction of the Philippines with intention to
unload therein.
Importation is deemed terminated upon payment of the
duties, taxes and other charges due upon the articles, or
secured to be paid, at a port of entry and the legal permit
for withdrawal shall have been granted, or in case articles
are free of duties, taxes and other charges, until they have
legally left the jurisdiction of the customs
Tax Base:
There shall be levied, assessed and collected on every
importation of goods a value-added tax equivalent to
twelve percent (12%) based on the total value used by the
Bureau of Customs in determining tariff and custom duties,
plus customs duties, excise taxes, if any, and other
charges, such tax to be paid by the importer prior to the
release of such goods from customs custody: Provided,
that where the customs duties are determined on the basis
of the quantity or volume of the goods, the value-added
tax shall be based on the landed cost plus excise taxes, if
any.
Computation:
In general, where customs duties are based on the value
(ad valorem):

Computation:
In case where customs duties is based on volume or
quantity (specific):

Output Tax
Output tax means the value-added tax on sale or lease of
taxable goods or properties or services by any person
registered or required to register.
In a sale of goods or properties, the output tax is
computed by multiplying the gross selling price by the
regular rate of VAT