Cash received(actually and constructively) xxx

Deposits/advance payments for future project xxx

Materials charged for services xxx
Gross receipts xxx
X Vat rate 12%
Output Vat xxx
Less: Input Vat xxx
Vat payable/(Excess input Taxes) xxx
 -Section 108 (A) of the NIRC defined and
categorized “sales or exchange of services”
as the performance of all kinds of services
in the Philippines for a fee, remuneration,
or consideration including those:
• Professional/ Technical Services
• Transfer of Technology
• Lease or Use of Intangible Property
• Lease or Use of Tangible Property
As a rule, earnings from a practice of
profession (including services rendered by
doctors of medicine and lawyers) will be
subject to a 12% VAT if:
 The professional is a VAT-registered
person, or
 Not VAT-registered but his total gross
receipts exceed ₱3,000,000 per year.
 In general, the gross receipts of service
contractors are subject to 12% VAT

 The transactions entered by a service contractor ,

subject to value added tax with the government
is subject to a final withholding value added tax
of five percent(5%) of the gross payment.
 The contract for security services entered by
and between the security agency and its client
must provide for a breakdown of the amount
of security services into two components:
 Agency fee
 Security guards salary
Note: only the agency fee is subject to 12% VAT if the service
contract stipulates the breakdown of the amount of security
services
 Real estate broker – a person selling
property of others for a fee or commission
income
Rule: Income subject to VAT if
• Broker is VAT-registered or
• Total commission earnings exceed
₱3,000,000 during the taxable year
Rule: Subject to VAT based on their gross receipts.

The term “gross receipts” for dealers in securities

means gross selling price less cost of securities
sold.
 Includes all persons other than banks, non-bank
financial intermediaries
 not performing quasi-banking functions
 who make a practice of lending money for
themselves or for others for an interest
 Transport of goods and cargoes
-by land, air, and water by transportation
contractors as well as domestic common carriers
- Subject to 12% VAT

 Transport of passengers
-by air and sea within the Philippines is subject to 12% VAT
- By land is subject to other percentage tax (OPT) of 3%

 Transport of passengers and cargoes

-by DOMESTIC air or sea vessels from the Phil to
foreign country - 0%
 Services may cover a cross boarder movement
(from the Philippines to foreign port or vice
versa)
 or a local movement (within the Philippines) of
cargoes.
Particulars Include Exclude
Outbound Movement:

Local origin charges

Actual commission income of the forwarder on

the freight
Inbound Movement:

Local destination charges

Currency adjustment factor

Actual commission income of the forwarder on

the freight
Outbound or Inbound Movement:

Offshore destination or origin charges

Freight (exclusive of the commission of

forwarders)
Accessorial charges
 VAT is based on its gross receipts which will not
include the:
- cost of airline or ship tickets
- reimbursement of expenses for services
rendered by third party other than the travel
agency and paid to such party
*However, if the margin exceeds 9% of the gross selling price of the
ticket to the passenger, the BIR treats the traansaction as a resale
which is taxable on the gross selling price.
Taxable base includes, among others, charges for
rooms, laundry, and valet services, food, and
beverages consumption, corkage, handling
charges for providing telephone, telex, cable, or
fax services, cake shop sales, lease to
concessionaires, compensation, and other
service fees.
Taxable base does not include:
• Service charges billed separately and actually
distributed to waiters and employees
• Actual cost of long distance and overseas
telephone calls, and other charges of the
telecommunication companies collected by the
establishment
• Local taxes
 Gross receipts subject to VAT on media
transactions would comprise the following:
-The amount of gross receipts representing
agency commissions received by an advertising
agency of the services it performed as a broker for
the media and the advertiser, and
-The amount representing gross receipts derived
by the media from its advertising services
Gross receipts are subject to 12% VAT
Subject to the following rules:
 If monthly rental does not exceed P15,000 per
unit per month - lessor shall be exempt from
VAT and other percentage tax (OPT)
 If monthly rental exceeds P15,000 per month
per unit but the aggregate annual rentals do
not exceeds P3,000,000- lessor is subject to 3%
OPT
 If monthly rental exceeds P15,000 per month
per unit and the aggregate annual rentals
exceed P3,000,000, lessor is subject to 12%
VAT
 Telecommunications- taxable base for VAT is the
gross receipts from their telephone, telegrsph,
telewriter exchange, wireless and other
communication facilities services excluding
amounts earmarked as the foreign
administration's share relating to the services
performed outside the Philippines
 Radio and/or television broadcasting - gross
receipts of the preceeding year exceeding Ten
Million shall be subject to 12% VAT, gross
receipts of the preceding year not exceeding Ten
Million shall be subject to 3% percentage tax

 Gas and water utilities shall be subject to 2%

franchise tax on their gross receipts derived from
the business covered by the law granting the
franchise.
 Sale by the artist of his works of art,
literary works, musical compositions
and similar creations, or his services
performed for the production of such
works are now subject to VAT
 Importations of goods into the Philippines are subject to
VAT, whether the importation is intended for business
or for personal use.
 Tax Base
- Based on the total value used by the Bureau of
Customs in determining tariff and custom duty(dutiable
value), plus custom duties, excise taxes, if any, and other
changes prior to the removal of the goods from customs
custody OR
-Based on the landed cost plus excise tax, if any, and
other charges prior to the removal of the goods from
custom custody, if the custom duties are determined on
the basis of quantity or volume of the goods.
 Landed cost includes invoice cost, freight,
insurance and other charges.
 Other charges prior to removal of goods from
custom custody are:
-Insurance -Freight
-Postage -Commisiion
-Interest -Bank charges
-Wharfage dues -Arrastre charges
-Stamps -Processing fee
-Custom brokerage fee -Custom duties
-Excise tax, if any