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VALUE-ADDED TAX by Mind Map: VALUE-ADDED TAX

1. SALE OF GOODS AND PROPERTIES (Sec. 106, NIRC)

1.1. Is it in the regular course of business?

1.1.1. Y

1.1.1.1. 12% VAT RATE of the gross selling price or gross value in money of the goods or properties sold, bartered, or exchanged. [Sec. 106(A), NIRC]

1.1.1.1.1. Transactions "deemed sale" of taxable goods or properties [Sec. 106(B), NIRC]

1.1.1.1.2. Every sale, barter, or exchange of goods or properties (actual sale and in the course of trade or business) [Sec. 106(A), NIRC]

1.1.1.2. 0% VAT RATE [Sec. 106(A)(2), NIRC]

1.1.1.2.1. Export Sales [Sec. 106(A)(2)(a), NIRC]

1.1.1.2.2. Sales to persons or entities whose exemption under special laws or international agreement to which the Philippines is a signatory effectively subjects such sales to zero rate. [Sec. 106(A)(2)(b), NIRC]

1.1.1.3. VAT EXEMPT TRANSACTIONS (Sec. 109, NIRC)

1.1.1.3.1. (1) Agricultural and marine products in their original state; livestock and poultry for human consumption; breeding stock and genetic materials (2) 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 (3) Transactions which are exempt under international agreements (4) Sales by agricultural cooperatives duly registered with the Cooperative Development Authority (CDA) (5) Sales by non-agricultural, non-electric and non-credit cooperatives duly registered and in good standing with the CDA (6) Export sales by persons who are not VAT registered; (7) Sale of real properties (8) books and any newspaper, magazine, review or bulletin (9) passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereofpassenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof (10) Goods and services to senior citizens and PWDs (11) Transfer of property pursuant to Sec. 40(2), NIRC (12) Association dues, membership fees, other fees collected by HOAs (13) Sale of gold to BSP (14) Sale of drugs and medicies for diabetes, high cholesterol, and hypertension (15) Other transactions not mentioned, with gross annual sales not exceeding P3M.

1.1.2. N

1.1.2.1. NO VAT.

2. IMPORTATION OF GOODS (Sec. 107, NIRC)

2.1. 12% VAT RATE (Sec. 107(A) NIRC)

2.1.1. Total value used by the Bureau of Customs (BOC) in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges (such as postage, commission)

2.2. VAT EXEMPT TRANSACTIONS (Sec. 109, NIRC)

2.2.1. (1) Agricultural and marine products in their original state; livestock and poultry for human consumption; breeding stock and genetic materials (2) 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 (3) Personal and household effects belonging to Philippine residents from abroad and nonresident citizens coming to resettle (4) Professional instruments and implements, tools of trade, occupation or employment, wearing apparel, domestic animals, and personal household effects: (5) Fuel, goods, and supplies by persosn engaged in international shipping or air transport operations.

3. SALE OF SERVICES AND USE OR LEASE OF PROPERTIES (Sec. 108, NIRC)

3.1. Is it in the Regular Course of Business?

3.1.1. Y

3.1.1.1. 12% VAT RATE on gross receipt derived from the sale or exchange of services, including the use or lease of properties. [Sec. 108(A), NIRC)

3.1.1.1.1. "Sale or exchange of services" include services performed by the following: a. Construction and service contractors b. Stock, real estate, commercial, customs and immigration brokers c. Lessors of property, whether personal or real d. Persons engaged in warehousing service e. Lessors or distributors of cinematographic films f. Persons engaged in milling, processing, manufacturing or repacking goods for others(except palay into rice, corn into corn grits, and sugarcane into raw sugar) g. Proprietors, operators, or keepers of hotels, motels, etc. h. Proprietors or operators of restaurants, ad other dining establishments i. Dealers in securities j. Lending investors k. Transporation contractors l. Domestic trips of common carriers by air and sea m. Sales and transmission of electricity n. Franchise grantees o. Non-life insurance companies p. Similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties

3.1.1.2. 0% VAT RATE [Sec. 108(B), NIRC)

3.1.1.2.1. (1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported (5) Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed 70% of total annual production

3.1.1.2.2. (2) Services other than those mentioned in the preceding paragraph, rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed (3) 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 0% rate (4) Services rendered to persons engaged in international shipping or international air transport operations, including leases of property for use thereof: (6) Transport of passengers and cargo by domestic air or sea vessels from the Philippines to a foreign country (7) Sale of power or fuel generated through renewable sources of energy (8) Services rendered to registered enterprises: (1) within a separate customs territory as provided under special laws, (2) within tourism enterprise zones declared by the TIEZA subject to RA 9593.

3.1.1.3. VAT EXEMPT TRANSACTIONS (Sec. 109, NIRC)

3.1.1.3.1. (1) Services subject to percentage tax (2) Services by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar cane into raw sugar (3) Medical, dental, hospital and veterinary services, except those rendered by professionals; (4) Educational services (5) Services rendered by individuals pursuant to an employer-employee relationship; (6) 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 (7) Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with the CDA (8) Lease of residential units with a monthly rental per unit not exceeding P15,000; (9) books and any newspaper, magazine, review or bulletin (10) Transport of passengers by international carriers; (11) passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereofpassenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof (12) Banks, non-bank financial intermediaries performing quasi-banking functions (13) Goods and services to Senior citizens and PWDs (14) Other transactions not mentioned with receipts not exceeding P3M.

3.1.2. N

3.1.2.1. NO VAT.