VAT-EXEMPT TRANSACTIONS

(under TRAIN Law)

† Sale or importation of:

-agricultural and marine food products in their ORIGINAL STATE
-livestock and poultry of a kind generally USED as, or YIELDING or PRODUCING FOODS for human
CONSUMPTION
-breeding stock and genetic materials
† Sale or importation of:
-fertilizer, seeds, seedlings and fingerlings
-fish, prawn, livestock and poultry FEEDS including INGREDIENTS whether LOCALLY PRODUCED or
IMPORTED, used in MANUFACTURE OF FINISHED FEEDS (Note: except specialty feeds for race horses, fighting cocks,
aquarium fish, zoo animals and other animals generally considered as pets)
† Importation of personal and household effects
-belonging to residents of the PH returning from abroad
-non-resident citizens coming to resettle in the PH
(Note: provided that such goods are exempt from customs duties under the Tariff and Customs Code of the PH)
† Importation of:
-professional instruments and implements, tools of trade, occupation or employment, wearing apparel,
domestic animals and personal and household effects
 belonging to persons coming to settle in the PH or Filipinos or their families and descendants
who are now residents or citizens of other countries, such parties hereinafter referred to as
overseas Filipinos
 in quantities and of the class suitable to the profession, rank or position of the persons importing
said items
 for their own use and not for barter or sale, accompanying such persons, or arriving within
reasonable time
(Note: Provided that the Bureau of Customs may, upon the production of satisfactory evidence that such persons are
actually coming to settle in the PH and that the goods are brought from their former place of abode, exempt such goods
from payment of duties and taxes. Provided further, that vehicles, vessels, aircrafts, machineries and other similar goods
for use in manufacture, shall not fall within this classification and shall therefore be subject to duties, taxes and other
charges.)
† Services subject to PERCENTAGE TAX
† Services by AGRICULTURAL CONTRACT GROWERS and MILLING FOR OTHER OF PALAY INTO RICE, CORN
INTO GRITS AND SUGARCANE INTO RAW SUGAR
† Medical, dental, hospital and veterinary services, except those rendered by professionals
† Educational services rendered by:
-private educational institutions, duly accredited by DepEd, CHED and TESDA
-those rendered by government educational institutions
† Services rendered by individuals pursuant to an EMPLOYER-EMPLOYEE relationship
† Services rendered by regional or area headquarters established in the PH by multi-national 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 PH
† Transactions that are exempt:
-under international agreement to which the PH is a signatory
-under special laws except those granted under PD No. 529
† Sales by agricultural cooperatives duly registered and in good standing with the CDA TO THEIR MEMBERS
as well as:
-sale of their produce, whether in its original state or processed form to non-members
-their importation of direct farm inputs, machinery and equipment, including spare parts thereof, to be
used directly and exclusively in the production and/or processing of their produce;
(Note: Sale by agricultural cooperatives to non-members can only be exempted from VAT if the producer of the agricultural products
sold is the cooperative itself. If the cooperative is not the producer (e.g. trader), then only those sales to its members shall be
 exempted from VAT; It is to be reiterated, however, that sale or importation of agricultural food products in their original state is
exempt from VAT irrespective of the seller and buyer thereof)
† Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered and in
good standing with the CDA
† Sales by non-agricultural, non-electric and non-credit cooperatives duly registered and in good standing
with the CDA (Note: Provided, that the share capital contribution of each member does not exceed P15,000 and regardless of the
aggregate capital and net surplus ratably distributed among the members)
† Export sales by persons who are not VAT-registered
† Sale of real properties not primarily held for sale to customers or held for lease in the ordinary course of
trade or business or:
-real property utilized for low cost and socialized housing as defined by R.A. 7279, otherwise known as the
Urban Development and Housing Act of 1992, and other related laws
-residential lot valued at P1,500,000 and below, house and lot, and other residential dwellings valued at
P2,500,000 and below (Note: Provided that beginning January 1, 2021, the VAT exemption shall only apply to sale of real
properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business, sale of real property
utilized for socialized housing as defined by RA No. 7279, sale of house and lot, and other residential dwellings with selling price of
not more than P2,000,000. Provided further, that every 3 years thereafter, the amount herein stated shall be adjusted to its present
value using the Consumer Price Index, as published by the PSA)
(Note: Sale of parking lot in a condominium is a separate and distinct transaction and is not covered by the rules on threshold
amount not being a residential lot, house and lot or a residential dwelling, thus, should be subject to VAT regardless of the amount of
selling price)
† Lease of residential units with a monthly rental not exceeding P15,000
† Sale or 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 advertisement
† The transport of passengers by international carriers
† Sale, importation or lease of passenger or cargo vessels and aircrafts, including engine, equipment and
spare parts thereof for domestic or international transport operations (Note: Provided, however, that the
exemption from VAT on the importation and local purchase of passenger and/or cargo vessels shall be subject to the requirements on
restriction on vessel importation and mandatory vessel retirement program of MARINA)
† Importation of fuel, goods and supplies by persons engaged in international shipping and air transport
operations. The fuel, goods and supplies shall be used for international shipping or air transport
operations. Thus, said fuel, goods and supplies shall be used exclusively or shall pertain to the transport of
goods and/or passenger from a port in the PH directly to a foreign port, or vice versa, without docking or
stopping at any other port in the PH unless the docking or stopping at any other PH port id for the
purpose of unloading passengers and/or cargoes that originated from abroad, or to load passengers
and/or cargoes bound for abroad. (Note: Provided, further, that if any portion of such fuel, goods or supplies is used for
purposes other than that mentioned in this paragraph, such portion of fuel, goods and supplies shall be subject to 12% VAT)
† Services of bank, non-bank financial intermediaries performing quasi-banking functions and other non-
bank financial intermediaries such as money changers and pawnshops, subject to percentage tax under
Secs. 121 and 122 of the Tax Code
† Sale or lease of goods and services to senior citizens and persons with disability, as provided under R.A.
9994 (Expanded Senior Citizens Act of 2010) and R.A. 10754 (An Act Expanding the Benefits and Privileges
of Persons with Disability) respectively
† Transfer of Property pursuant to Section 40 (C) (2) of NIRC as amended (merger or consolidation)
† Association dues, membership fees, and other assessments and charges collected by homeowner’s
associations and condominium corporations
† Sale of GOLD to the BSP
† Sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension beginning
January 1, 2019
† 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
P3,000,000 (Note: Self-employed individuals and professionals availing of the 8% tax on gross sales and/or receipts and other non-
operating income, under Sections 24(A)(2)(b) and 24(A)(2)(c)(2)(a) of the Tax Code shall also be exempt from the payment of 12%
VAT.)