VAT EXEMPT DOMESTIC

SALES

Prepared by: Kamuar, Monera D.

Amon, Joshua Sapphire
Exempt Sales of Goods, or Properties
1. Sale of goods to senior citizens and persons with disability.

2. Sale of exempt goods:

a. Agricultural and marine food products in their original state.
b. Fertilizers; seeds, seedlings, and fingerlings, fish, prawn, livestock, and
poultry feeds, including ingredients used in the manufacture of finished
feeds
c. Books, newspapers, or magazines
d. Prescription drugs and Medicines for:
• Diabetes, high cholesterol, and hypertension.
• Cancer, mental illness, tuberculosis, and kidney diseases
 e. Passenger or cargo vessels and aircrafts
3. Sale of goods by cooperatives:
a. Agricultural cooperatives duly registered in good standing with the
Cooperative Development Authority (CDA) to their members.
b. Sales by non-agricultural, non-electric, and non-credit cooperatives that
are duly registered and in good standing with the CDA.

CAPITAL CONTRIBUTION TAX

< P15,000 Exempt

> P15,000 Subject to VAT
4. Sale of Real Properties (Beginning January 1, 2021):
a. Not primarily held for sale
b. Utilized for socialized housing units
• House and lot package – Php450,000
• Residential lots only – Php180,000
c. Sale of house and lot and other residential dwelling with selling price of
P3,199,200 and below.
(Note: The provision of the CREATE LAW increased the threshold to P4,200,000)

5. Export sales by persons who are not VAT registered.

6. Sales of goods exempt under an international agreement to which the

Philippines is a signatory or under special laws.
7. Tax-free exchange of property

8. Sale of gold to the Bangko Sentral ng Pilipinas (BSP).

9. Sale or importation of the following (from January 1, 2021 to December 31,

2023, RR 4-2021; CREATE Law):
a. Capital equipment, its spare parts and raw materials, necessary for the
production of personal protective equipment (PPE) components such as
coveralls, gown, surgical cap, surgical mask, n-95 mask, scrub suits,
goggles and face shield, double or surgical gloves, dedicated shoes, and
shoe covers, for COVID-19 prevention;
 b. Drugs, vaccines and medical devices specifically prescribed and directly
used for the treatment of COVID-19; and

c. Drugs for the treatment of COVID-19 approved by the Food and Drug
Administration (FDA) for use in clinical trials, including raw materials
directly necessary for the production of such drugs.

10. Sale of goods or properties other than the transactions mentioned in the
preceding paragraphs, the gross annual sales and/or receipts do not exceed
the amount of P3,000,000, as amended.
Exempt Sales of Services
1. Educational services rendered by:
a. Private educational institutions, duly accredited by DEPED, CHED and
TESDA.
b. Government Educational Institutions
2. Services rendered by individuals pursuant to an employer employee
relationship.

3. Agricultural contract growers; and milling for others of palay into rice, com
into grits and sugar cane into raw sugar.
4. Lease of a residential unit with a monthly rental not exceeding P15,000
regardless of the amount of aggregated annual rental.
 Lease of Residential Units

Monthly Annual Tax Liability

Less than P15,000 Below P3,000,000 VAT Exempt

More than P15,000 Below P3,000,000 Percentage Tax under

Section 116
 Lease of Several Residential Units

Monthly Annual Tax Liability

Less than P15,000 per Regardless of the

VAT Exempt
unit amount
More than P15,000 per More than P3,000,000
unit Subject to VAT

More than P15,000 per Below P3,000,000 Percentage Tax under

unit Section 116
5. Gross receipts from lending activities by credit or multi-purpose duly
registered with the Cooperative Development Authority (CDA).

6. Medical, dental, hospital and veterinary services except those

rendered by professionals.

7. Association dues, membership fees, and other assessments and

charges collected on a purely reimbursement basis by homeowners
associations and condominium corporations.

8. Lease of passenger or cargo vessels and aircrafts, including spare parts and
equipment thereof.
9. Sales of services exempt under an international agreement to which the
Philippines is a signatory or under special laws.

10. 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.

11. Transport of passengers by international carriers doing business in

the Philippines
International Carriers:

Transport of Originating from Philippines

Passengers VAT Exempt

Cargo or Goods Common Carrier’s Tax

Domestic Common Carriers:

Transport of Within the Philippines Philippines to Abroad

Passengers:
Common Carrier’s Tax 0% VAT
• Land
• Air or sea VAT 0% VAT
Cargo or goods or mails VAT 0% VAT
10. Printing or publication of books, and any newspaper or magazine. Provided,
that the materials enumerated herein are not devoted principally to the
publication of paid advertisements.

11. Sale of services to senior citizens and persons with disability.

12. 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.

13. Services subject to percentage tax.