1.

Sale of goods or services to Asian

Development Bank
2. Export sales of persons who are not VAT
registered
3. Distribution on transfer of goods to creditor
in payment of debt or obligation
4. Medical services rendered by a doctor
employed by the hospital to confined
patient
5. Sale of power or fuel generated through
renewable sources of energy
6. Milling of cassava into cassava flour
7. Sale of real property utilized for low-cost
or socialized housing
8. Export sales of persons who are VAT
registered
9. Sales of electricity by generation,
transmission and/or distribution companies
10. Medical services rendered by
professionals
State whether the following transactions are: a) subject to VAT at
12% b) subject to VAT at 0%; or c) VAT Exempt:

1. Sale of fresh vegetables by Aling Ining at the

Pamilihang Bayan ng Trece Martirez.
2. Services rendered by Jake's Construction
Company, a contractor to the World Health
Organization in the renovation of its offices in
Manila.
3. Sale of tractors and other agricultural
implements by Bungkal Incorporated to local
farmers.
4. Sale of RTW by Cely's Boutique, a Filipino dress
designer, in her dress shop and other outlets.
A VAT-registered contractor has the following selected
VAT exclusive data for the month of July 2011:

Collections from contracts completed in 2010 P500,000

Advances from contracts to be completed in 2012 300,000
Collections from contracts completed in July 2011,
net of 10% retention on billings transferred by the 228,000
payor to the account of the contractor
Materials charged with the services rendered July, 100,000
2011
Payment for services rendered by a sub-contractor, 200,000
July, 2011

Total output tax using 12% VAT rate?

Compute output VAT:
1) Selling price, net of VAT,
P120,000
2) Selling price, gross of VAT,
P240,000
3) Sales per books, P100,000
4) Selling price including
erroneous VAT, P110,000
 Zero-Rated Sales
Before Under TRAIN
TRAIN
a. Export sales of goods Zero-rated Zero-rated
b. Foreign currency denominated Zero-rated 12% regular VAT
sales rate
c. Effectively zero-rated sales Zero-rated Zero-rated
 Review
• Sale to non-resident buyer of goods
assembled in the Philippines to be delivered
to a resident in the Philippines, paid for in
acceptable foreign currency and accounted
per BSP rules and regulations
 Review
• Sale of agricultural food products in their
original state where the annual gross sales
exceed P3,000,000.
• Sale of canned food products where the
annual gross sales exceed P3,000,000.
• Sale of agricultural food products in their
original state where the annual gross sales do
not exceed P3,000,000.
• Sale of canned food products where the
annual gross sales do not exceed P3,000,000.
 Review
• Sale of cut flowers
• Sale of copra, molasses and ordinary salt
• Sale of lechong manok (take out)
• Sale of lechong manok in a restaurant
 Review
• Services rendered by transportation contractors
on their transport of goods or cargoes from one
domestic port to another domestic port.
• Transport of passengers and cargoes by a
domestic air or sea carriers from the Philippines
to a foreign country.
• Sale of goods, supplies, equipment and fuel to
persons engaged in international shipping and air
transport operations.
Zero-rated Sales of Goods or Properties which Shall be
Subject to 12% VAT Upon Satisfaction of Certain Conditions
(under the TRAIN)
a. Items subject to the twelve 1) Sale of raw materials or packaging materials
percent (12%) value-added tax to a nonresident buyer for delivery to a
and no longer be considered resident local export oriented enterprise to be
export sales subject to zero used in manufacturing, processing, packing or
percent (0%) VAT rate repacking in the Philippines of the said buyer's
goods and paid for in acceptable foreign
currency and accounted for in accordance with
the rules and regulations of the Bangko Sentral
ng Pilipinas (BSP);
2) Sale of raw materials or packaging materials to
export-oriented enterprise whose export sales
exceed 70% of the total annual production;
3) Those considered export sales under the
Omnibus Investment Code of 1987 (E. O. No.
226), and other special laws.
Zero-rated Sales of Goods or Properties which Shall be
Subject to 12% VAT Upon Satisfaction of Certain Conditions
(under the TRAIN)
b. Conditions to be satisfied 1) Successful establishment and implementation
of an enhanced VAT refund system that grants
refunds of creditable input tax within ninety
(90) days from the filing of the VAT refund
application with the Bureau.

To determine the effectivity of item no. 1, all

applications filed from January 1, 2018 shall be
processed and must be decided within
ninety(90)days from the filing of the VAT refund
application; and

2) All pending VAT refund claims as of December

31, 2017 shall be fully paid in cash by December
31, 2019
Zero-rated Sales of Services and Lease of Properties which
Shall be Subject to 12% VAT Upon Satisfaction of Certain
Conditions (under the TRAIN)
a. Items subject to the twelve 1) Processing, manufacturing or repacking of
percent (12%) value-added tax goods for other persons doing business
and no longer be considered outside the Philippines which goods are
export sales subject to zero subsequently exported where the services are
percent (0%) VAT rate paid for in acceptable foreign currency and
accounted for in accordance with the rules and
regulations of the BSP;
2) Services performed by subcontractors and/or
contractors in processing, converting, or
manufacturing goods for an enterprise whose
export sales exceed 70% of the total annual
production.
Zero-rated Sales of Services and Lease of Properties which
Shall be Subject to 12% VAT Upon Satisfaction of Certain
Conditions (under the TRAIN)
b. Conditions to be satisfied 1) Successful establishment and implementation
of an enhanced VAT refund system that grants
refunds of creditable input tax within ninety
(90) days from the filing of the VAT refund
application with the Bureau.

To determine the effectivity of item no. 1, all

applications filed from January 1, 2018 shall be
processed and must be decided within
ninety(90)days from the filing of the VAT refund
application; and

2) All pending VAT refund claims as of December

31, 2017 shall be fully paid in cash by December
31, 2019
 VAT-Exempt Transaction
Before Train Under Train
Importation of professional instruments Importation of professional instruments
and implements, wearing apparel, and implements, tools of trade,
domestic animals, and personal occupation or employment, wearing
household effects apparel, domestic animals, and
personal and household effects

belonging to persons coming to settle in belonging to persons coming to settle in

the Philippines, the Philippines 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 sale,
barter or exchange, accompanying such for their own use and not for barter or
persons, or arriving within ninety (90) sale, accompanying such persons, or
days before or after their arrival arriving within a reasonable time
 VAT-Exempt Transaction
Before Train
upon the production of evidence
satisfactory to the Commissioner, that
such persons are actually coming to
settle in the Philippines and that the
change of residence is bona fide;
(except any vehicle, vessel, aircraft,
machinery other goods for use in the
manufacture and merchandise of any
kind in commercial quantity)
Under Train
Provided, That the Bureau of Customs
may, upon the production of
satisfactory evidence that such persons
are actually coming to settle in the
Philippines 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;
 VAT-Exempt Transaction
Before Train Under Train
Threshold for VAT –exempt sale of VAT –exempt sale of residential lot
residential lot is P1,919,500 reverted to P1,500,000

Threshold for VAT –exempt sale of VAT –exempt sale of house and lot and
house and lot is P3,199,200 other residential dwellings reverted to
P2,500,000

Beginning 2021, threshold of VAT-

exempt sale of house & lot and other
residential dwellings will be reduced to
P2,000,000 and sale of low-cost housing
and sale of residential lot will be subject
to VAT
 Review
• Sale of residential lot by real estate dealer the
value of which is P1,500,000
• Sale of real property utilized for low-cost or
socialized housing
• Sale of house and lot by real estate dealer the
value of which is P1,500,000
• Sale of house and lot by real estate dealer the
value of which is P2,500,001
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.
 Case 1 Case 2 Case 3
Selling price, condominium unit P2,000,000 P2,500,000 P4,500,000
Selling price, parking lot 500,000 800,000 900,000
Total P2,500,000 P3,300,000 P5,400,000
VAT-subject ? ? ?
VAT-exempt ? ? ?
 VAT-Exempt Transaction
Before Train Under Train
Lease of residential units with a Lease of residential units with a
monthly rental not exceeding P12,800 monthly rental not exceeding P15,000
(used to be P10,000) regardless of the
amount of aggregate rentals received
by the lessor during the year
 Review
• Lease of residential units where the monthly
rental per unit does not exceed P15,000
• Lease of commercial units where the monthly
rental per unit does not exceed P15,000 and
whose annual gross rentals amount to
P3,000,000
 Apartment Commercial
house bldg.
Case 1
Rent per unit per month P15,000 P15,000
Annual gross receipts 2,500,000 2,500,000
VAT-subject ? ?
VAT-exempt ? ?

Case 2
Rent per unit per month 15,000 15,000
Annual gross receipts 3,500,000 3,500,000
VAT-subject ? ?
VAT-exempt ? ?
 Apartment Commercial
house bldg.
Case 3
Rent per unit per month P20,000 P20,000
Annual gross receipts 3,000,000 3,000,000
VAT-subject ? ?
VAT-exempt ? ?

Case 4
Rent per unit per month 20,000 20,000
Annual gross receipts 3,500,000 3,500,000
VAT-subject ? ?
VAT-exempt ? ?
If two or more adjacent residential lots, house and lots or other
residential dwellings are sold or disposed in favor of one buyer from
the same seller, for the purpose of utilizing the lots, house and lots or
other residential dwellings as one residential area, the sale shall be
exempt from VAT only if the aggregate value of the said properties do
not exceed P1,500,000 for residential lots, and P2,500,000 for
residential house and lots or other residential dwellings. Adjacent
residential lots, house and lots or other residential dwellings although
covered by separate titles and/or separate tax declarations, when sold
or disposed to one and the same buyer, whether covered by one or
separate Deed/s of Conveyance, shall be presumed as a sale of one
residential lot, house and lot or residential dwelling.
 Lot 1 Lot 2 Lot 3
Value of the lot P800,000 P900,000 P1,000,000
Sold to Mr. A Mr. B Mr. C
VAT-subject ? ? ?
VAT-exempt ? ? ?

Lot 1 Lot 2 Lot 3

Value of the lot P800,000 P900,000 P1,000,000
Sold to Mr. A Mr. A Mr. A
VAT-subject ? ? ?
VAT-exempt ? ? ?
 VAT-Exempt Transaction
Before Train Under Train
No provision Sale or lease of goods and services to
senior citizens and persons with
disability, as provided under RA 9994
(Expanded Senior Citizens Act of 2010)
and 10754 (An Act Expanding the
Benefits and Privileges of Persons With
Disability), respectively
No provision Transfer of property pursuant to Section
40 (c ) (2) of the NIRC as amended
(merger and consolidation)
No provision Association dues, membership fees, and
other assessments and charges
collected by homeowners associations
and condominium corporations;
No provision Sale of drugs and medicines prescribed
for diabetes, high cholesterol, and
hypertension, beginning January 1,
2019
 VAT-Exempt Transaction
Before Train Under Train
Used to be zero-rated Sale of gold to Bangko Sentral
ng Pilipinas
 VAT-Exempt Transaction
Before Train Under Train
Sale or lease of goods or properties or Sale or lease of goods or properties or
the performance of services other than the performance of services other than
the transactions mentioned in the the transactions mentioned in the
preceding paragraphs, the gross annual preceding paragraphs, the gross annual
sales and/or receipts do not exceed the sales and/or receipts do not exceed the
amount of P1,919,500 (used to be amount of P3,000,000
P1,500,000)
 Husband Wife
Case 1
Gross receipts, practice of profession P2,500,000 P2,000,000
VAT-subject ? ?
VAT-exempt ? ?

Case 2
Gross receipts, practice of profession 1,800,000 -
Gross receipts, beauty parlor - 1,200,000
Gross receipts, trucking business 1,500,000 -
Gross sales, grocery store - 1,500,000
Gross sales, agricultural food products (orig state) 1,200,000 -
Gross sales, livestock - 1,300,000
Total 4,500,000 4,000,000
VAT-subject ? ?
VAT-exempt ? ?