In short…

Exempt consumptions are: “A/M HERE RI2CS QT”

Exempt consumptions: a detailed look

● A/M food products –
- “In original state” means unprocessed foods for human consumption
- Food of things for ultimate human consumption
- Agricultural contract growers/millers
● Hospital services – within hospital, except:
- Sales of medicine
- Services of professionals
● Employment – this is not a business
● Regional Area Headquarter of Multinational company – this is not business
● Educational services – schools accredited by CHED, TESDA and or Dep-Ed
● Real Properties
- Sale of real properties
➔ by non-dealers (casual sale)
➔ By dealers of:
➢ low-cost housing units (P180,000 and P450,000)
➢ socialized housing units (P750,000)
➢ residential lots (P1,919,500)
➢ residential dwellings (P3,199,200)
- Lease of residence – rental per unit per month do not exceed P12,800
● International/Domestic sea or air carriers
- Sale/importation/lease – aircraft, sea vessels, machineries, equipments and spare parts
● Cooperatives – all cooperatives of any forms so long as with a CGS, except electric cooperatives
● Quasi-Importation
- Importation of personal, household effects and professional instruments belonging to non residents
coming to settle in the Philippines
- Importation of fuel or supplies by persons engaged in international transport operations

THE VAT ON IMPORTATION

- All importations not falling under exempt importation under A/M HERE RI2CS QT are subject to 12% VAT on
landed cost

BUSINESS TAXATION
The Business Concept: “HABITUAL ENGAGEMENT IN A COMMERCIAL ACTIVITY.”

What business tax to pay?

- List of services/entities specifically subject to percentage taxes (BICAP FLOW)
- Other sellers of goods or services are VATABLE

Mnemonics: BICAP FLOW

- Banks
- International carriers
- Common carriers
- Certain amusement places
- PSE sales
- Franchises
- Life Insurance
- Overseas Communication
- Winnings

What is VATABLE?
- “Vatable” means subject to the VAT on sales if the person is VAT-registered or VAT registrable.
- A VAT-registrable person is a person who exceeded the VAT threshold
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