VAT-EXEMPT

TRANSACTION
S
Julius Rey R. Custodio

Nature
VAT exempt transactions refer to the sale of
goods or properties and/or services and the
use or lease of properties that is not subject
to VAT (output tax) and the seller is not
allowed any tax credit of VAT (input tax) on
purchases (RR No. 6-2005, Sec.4, 109-1).

Features

VAT Exempt Persons

Secs.109 (A) to (V) as amended by RA 10378 dated
March 7,2013;
Sec.(W), gross annual sales or receipts do not exceed
P1,919,500;
Any business principally for subsistence or livelihood
provided that the aggregate gross sales or receipt
during the 12-month period shall not exceed P100,000
(RMO-4-98);
VAT exempt under special laws of treaty.

Section 109 NIRC

Sale or Importation
Sale
Importation
Services
Others

Sale or Importation
1. 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
2. Sale or importation of 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;

Sale or Importation
3. Sale, importation or lease of
passenger or cargo vessels and aircraft,
including engine, equipment and spare
parts thereof for domestic or
international transport operations;

Sale or Importation
4. Sale, importation, printing or
publication of books and any
newspaper, magazine, review, and
bulletin.

Sale
1. Sale of Real Properties;

Sale
2. Export sales by persons who are not
VAT registered;

Sale
3. Sales by agricultural cooperatives of
food and non-food products (whether in
original or processed form) duly
registered and in good standing with
the Cooperative Development Authority
(CDA);

Sale
4. Sales by non-agricultural, nonelectrical, and non-credit cooperatives
duly registered and in good standing
with the CDA.

Importation
1. Importation of personal and
household effects belonging to
residents of the Philippines returning
from abroad and non-resident citizen
coming to resettle in the Philippines;

Importation
2. Importation of professional
instruments and implements, wearing
apparel, domestic animals, and
personal household effects;

Importation
3.Importation of fuel, goods and
supplies by persons engaged in
international shipping or air transport
operations directly to a foreign port
without stopping at any other port in
the Philippines;

Importation
4. Importation of life saving equipment,
safety and rescue equipment and
communication and navigational safety
equipment, steel plates and other metal
plates, used for shipping transport
operations;

Importation
5.Importation of capital equipment,
machinery, spare parts, lifesaving and
navigational equipment, steel plates and
other metal plates to be used in the
construction, repair, renovation or
alteration of any merchant marine vessel
operated or to be operated in the
domestic trade.

Services
1. Services subject to percentage taxes
under Sections 116-117 of the Tax Code;

Services
2. Services by agricultural contract
growers and milling for others of palay
into rice, corn into grits, and sugar cane
into raw sugar;

Services
3. Medical, dental, hospital and veterinary
services except those rendered by
professionals;
CASE: Hermano (San) Miguel Febres
Cordero Medical Education Foundation vs
Commissioner of Internal Revenue (2012)

Services
4. Services of banks, non-bank financial
intermediaries performing quasi banking
functions, and other non-bank financial
intermediaries such as money changers and
pawnshops;
CASE: Tambunting Pawnshop Inc. Vs
Commissioner of Internal Revenue (January
21, 2010)

Services
5. Services rendered by individuals
pursuant to an employer-employee
relationship;

Services
6. Educational services rendered by
private educational institutions duly
accredited by DepEd, CHED, TESDA and
those rendered by government
educational institutions;
CASE: Informatics Alabang Center vs
CIR (Feb.28, 2011)

Services
7. Services rendered by Regional or
area headquarters established in the
Philippines by multinational
corporations as satellite centers for the
latter and which do not earn or derive
income from the Philippines.

Others
1. Lease of residential units;
2. Gross receipts from lending activities
by credit or multi-purpose cooperatives
duly registered and in good standing
with the CDA;
3. Transactions which are exempt under
international agreements to which the
Philippines is a signatory or under
special laws, except those under PD
529 (Petroleum Exploration

Others
CASE: Commissioner vs Seagate Technology (2005)
4. Transport of passengers by international carriers;
5. Sale of 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 1,919,500.

VAT on Non-stock, Nonprofit Equity or

Organization

VAT on Condominium
Corporation

VAT on Professionals

VAT Exemption on Senior

Citizens

Tax Credits

Thank you!