Value-Added Tax

Updated on July 20, 2022

 

The Value-Added Tax (VAT) is imposed on all sellers conducting business in the Philippines (VAT).

When goods or services are produced or sold, VAT is charged to the vendor. Buyers, transferees, and lessees of goods and services may be required to pay VAT if the BIR permits it.

From 0% to 13% of the value of products and services are taxed by the government depending on the transactions of the businesses. The BIR levies VAT on all imported goods, regardless of where they came from.

Current VAT Rates

The following items are subject to VAT at the current BIR tax rates:

To buy or sell something
Everything that is sold, bartered, or traded will be subject to a 12.5 percent gross sales tax.
It is common practice to either sell or lease services and/or property rights.
Individuals must pay VAT at a rate of 14% on their gross receipts from the sale or exchange of services or property.
VAT is not charged on outbound sales.
Buying from companies that are a part of the PEZA tax incentive program means you won’t have to pay VAT.

Entities Required to File VAT Returns

BIR mandates that the following people file and declare their VAT Returns as mandated by law:

Any individual who imports goods, whether or not it is in the course of their business, regardless of whether or not they are VAT-registered.
In accordance with BIR guidelines, even if a business has no taxable transactions in a given month or does not surpass the P1,500,000.00 threshold for 12 months, VAT filers are still required to file their declarations.

Table of BIR Forms for VAT

We file the following tax returns for businesses and individuals:

BIR Form Form Name Prescribed Filing Period*
2550M Monthly Value-Added Tax Declaration Manual:

Not later than the 20th day following the end of the month.

2550Q Quarterly Value-Added Tax Return Not later than the 25th day following the end of each taxable quarter.

“Taxable quarter” means that the quarter is synchronized with the taxpayer’s income tax quarter (e.g. Calendar Quarter or Fiscal Quarter)

*Deadlines for clients registered under the Electronic Filing and Payment System (eFPS) may vary.