Philippines Philippines

Goods

Vat standard rate

The VAT standard rate in the Philippines in 2024 is 12%

 

The Lovat VAT compliance platform

 

Vat zero rate

VAT zero rate applies to export transactions and other sales transactions.

In particular, zero-rated operations include:

  • the sale or import of certain agricultural products;
  • passenger transportation;
  • household gas and water;
  • financial services and insurance;
  • medical supplies;
  • real estate;
  • newspapers, and books.

 

Threshold

Any individual or legal entity that sells, exchanges, leases goods or property and renders services subject to VAT in the course of its business, where the value of the services rendered exceeds 3 000 000 Php (approximately 60,000 USD), is required to register as a VAT payer.

VAT payers whose quarterly revenue exceeds 2 500 000 Php (approximately 44,870 USD) must submit a Summary List of Sales.

 

Deductible VAT

A VAT payer has the option to declare and deduct VAT payable on imported goods or on the acquisition of goods, property, or services in the country by filing a VAT return in the usual manner, subject to certain conditions.

If you have an invoice for the imported goods, purchase of property, or an official receipt for services issued by a person registered as a VAT payer, further transactions carried out within the registered business may qualify as eligible for input VAT. These include:

  • purchase or import of goods intended for sale;
  • purchase or import of goods used in the production of finished goods for sale, including packaging materials;
  • purchase or import of goods intended for use in the manufacture of finished goods for sale;
  • purchase or import of goods used as inventory in business activities;
  • purchase or import of goods to be used as materials supplied for the sale of services;
  • goods for use in a trade or business that allow depreciation to be deducted in accordance with the tax code;
  • purchase of real estate on which value added tax has been paid;
  • purchase of services on which value added tax has been paid.

 

Registration procedure  

To become a VAT payer in the Philippines, individuals or businesses must complete a designated form (Form No. 0605) for each location where their business operates. A registration fee of 500 pesos (approximately 30 USD) is required to complete the registration process.

 

Vat representative

The Philippines requires that registration as a VAT payer be done through a local tax representative.

 

Filing VAT return

The Quarterly VAT return must be submitted no later than the 25th day after the end of the tax quarter, reflecting gross income (for a seller of services) The Quarterly VAT return must reflect the consolidated amount for all taxable activities and all establishments – head office and branches.

The Summary List of Sales/Purchases must be submitted no later than the 25th day of the month following the end of the tax quarter – calendar or financial quarter.

 

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Services

VAT standard rate

The VAT standard rate on services in the Philippines in 2024 is 12%.

 

The Lovat VAT compliance platform

 

Threshold

Non-resident digital service providers with annual gross revenues exceeding PHP 3 million (approximately USD 60,000) are required to register for VAT.

 

Deductible VAT

There are no VAT deductions for all electronic service providers in the Philippines.

 

Pieces of evidence

To determine that the place of supply of electronic services is the Philippines, it is only necessary to provide services to any person residing in the Philippines. This includes persons using the services for personal consumption as well as those using them for trade or commercial purposes.

 

E-services list

The list of digital services includes the following:

  • Software licensing, updates, and add-ons, including website filters and firewalls.
  • Mobile applications, video games, and online games.
  • Webcasts and webinars.
  • Digital content such as music, files, images, text, and information.
  • Advertising platforms that provide online advertising space on intangible media platforms.
  • Online platforms that allow the sale, display, and comparison of prices for goods or services, such as electronic marketplaces or networks.
  • Search engine services.
  • Social networks.
  • Databases and hosting, including website hosting, online data storage, file sharing, and cloud storage services.
  • Internet telecommunications.
  • Online publications and magazine subscriptions.
  • Payment processing services.

 

Registration procedure

To become a VAT payer in the Philippines, individuals or businesses must complete a designated form (Form No. 0605) for each location where their business operates. A registration fee of 500 pesos (approximately 30 USD) is required to complete the registration process.

 

Tax representative

Non-resident companies or non-resident intermediaries that provide electronic services and register for VAT are required to appoint a representative to act as your local agent and be responsible for fulfilling your tax obligations on your behalf.

 

Keeping records

For non-resident companies that are e-service providers in the Philippines, the general requirement for keeping accounting records is five years. These records should be maintained and readily accessible for review by the Bureau of Internal Revenue (BIR) or other relevant government agencies during that period.

 

Filling VAT return

VAT-registered taxpayers are no longer required to file the Monthly VAT Declaration for transactions starting January 1, 2023. Instead, they will file the corresponding Quarterly VAT Return.

The Quarterly VAT return must be submitted no later than the 25th day after the end of the tax quarter, reflecting gross income (for a seller of services) The Quarterly VAT return must reflect the consolidated amount for all taxable activities and all establishments – head office and branches.

The Summary List of Sales/Purchases must be submitted no later than the 25th day of the month following the end of the tax quarter – calendar or financial quarter.

 

VAT payment date

Electronic service providers are required to make payments within 25 days after the end of the tax quarter.

 

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