Description -Withholding Tax on Compensation is the tax withheld from income payments to individuals arising from an employer-employee relationship.

- Expanded Withholding Tax is a kind of withholding tax which is prescribed on certain income payments and is creditable against the income tax due of the payee for the taxable quarter year in which the particular income was earned. - !inal Withholding Tax is a kind of withholding tax which is prescribed on certain income payments and is not creditable against the income tax due of the payee on other income sub"ect to regular rates of tax for the taxable year. #ncome Tax withheld constitutes the full and final payment of the #ncome Tax due from the payee on the particular income sub"ected to final withholding tax. -Withholding Tax on $overnment %oney &ayments '$%&( - &ercentage Taxes - is the tax withheld by )ational $overnment *gencies ')$*s( and instrumentalities+ including government-owned and controlled corporations '$,CCs( and local government units '-$.s(+ before making any payments to non-/*T registered taxpayers suppliers payees -Withholding Tax on $%& - /alue *dded Taxes '$/*T( - is the tax withheld by )ational$overnment *gencies ')$*s( and instrumentalities+ including governmentowned and controlled corporations '$,CCs( and local government units '-$.s(+ before making any payments to /*T registered taxpayers suppliers payees on account of their purchases of goods and services. Codal Reference 0epublic *ct )os. 1232+ 4556+ 4223+ 4782 9ections 76 to 71 and 61 to 15 of the )ational #nternal 0evenue Code ')#0C( Frequently Asked Questions :( What are the types of Withholding Taxes; There are two main classifications or types of withholding tax. These are< a( Creditable Withholding Tax Withholding Tax on Compensation Expanded Withholding Tax Withholding of =usiness Tax '/*T and &ercentage( b( !inal Withholding Tax c. Withholding Tax on $overnment %oney &ayments - Withholding Tax on /at - Withholding Tax on &ercentage Taxes

2) What is compensation? #t means any remuneration received for services performed by an employee from his employer under an employee-employer relationship. 3) What are the different kinds of compensation? a( 0egular compensation - includes basic salary+ fixed allowances for representation+ transportation and others paid to an employee b( 9upplemental compensation - includes payments to an employee in addition to the regular compensation such as but not limited to the following< - ,vertime &ay - !ees+ including director>s fees - Commission - &rofit 9haring - %oneti?ed /acation and 9ick -eave - !ringe benefits received by rank @ file employees - Aa?ard &ay - Taxable :5th month pay and other benefits - ,ther remunerations received from an employee-employer relationship ) What are e!empted from Withholdin" #a! on Compensation? :. 0emuneration as an incident of employment+ such as follows< a. 0etirement benefits received under 0* 6B2: b. *ny amount received by an official or employee or by his heirs from the employer due to death+ sickness or other physical disability or for any cause beyond the control of the said official or employee such as retrenchment+ redundancy or cessation of business c. 9ocial security benefits+ retirement gratuities+ pensions and other similar benefits d. &ayment of benefits due or to become due to any person residing in the &hilippines under the law of the .9 administered .9 /eterans *dministration e. &ayment of benefits made under the 999 *ct of :472+ as amended f. =enefits received from the $9#9 *ct of :456+ as amended+ and the retirement gratuity received by the government employee 3. 0emuneration paid for agricultural labor 5. 0emuneration for domestic services 2. 0emuneration for casual labor not in the course of an employer>s trade or business 7. Compensation for services by a citi?en or resident of the &hilippines for a foreign government or an international organi?ation B. &ayment for damages 6. &roceeds of -ife #nsurance 1. *mount received by the insured as a return of premium

4. Compensation for in"uries or sickness :8. #ncome exempt under Treaty ::. Thirteenth ':5th( month pay and other benefits 'not to exceed & 58+888( :3. $9#9+ 999+ %edicare and other contributions :5. Compensation #ncome of %inimum Wage Earners '%WEs( with respect to their 9tatutory %inimum Wage '9%W( as fixed by 0egional Tripartite Wage and &roductivity =oard '0TW&=( )ational Wage and &roductivity Commission ')W&C(+ including overtime pay+ holiday pay+ night shift differential and ha?ard pay+ applicable to the place where he she is assigned. :2. Compensation #ncome of employees in the public sector if the same is equivalent to or not more than the 9%W in the non-agricultural sector+ as fixed by 0TW&= )W&C+ including overtime pay+ holiday pay+ night shift differential and ha?ard pay+ applicable to the place where he she is assigned. $) What are De %inimis &enefits? -These are facilities and privileges of relatively small value and are offered or furnished by the employer to his employees merely as means of promoting their health+ goodwill+ contentment or efficiency. The following shall be considered CDe %inimisC benefits not sub"ect to income tax+ hence not sub"ect to withholding tax on compensation income of both managerial and rank and file employees< v %oneti?ed unused vacation leave credits of private employees not exceeding ten ':8( days during the yearE v %oneti?ed value of vacation and sick leave credits paid to government officials and employees. v %edical cash allowance to dependents of employees+ not exceeding &678.88 per employee per semester or &:37.88 per monthE v 0ice subsidy of &:+788 or one ':( sack of 78 kg. rice per month amounting to not more than &:+788E v .niform and clothing allowance not exceeding &2+888 per annumE v *ctual medical assistance+ e.g. medical allowance to cover medical and healthcare needs+ annual medical executive check-up+ maternity assistance+ and routine consultations+ not exceeding &:8+888 per annumE v -aundry allowance not exceeding &588.88 per monthE

v Employees achievement awards+ e.g.+ for lenght of service or safety achievement+ which must be in the form of a tangible personal property other than cash or gift certificate+ with an annual monetary value not exceeding &:8+888 received by the employee under an established written plan which does not discriminate in favor of highly paid employeesE v $ifts given during Christmas and ma"or anniversary celebration not exceeding &7+888.88 per employee per annumE v Daily meal allowance for overtime work and night graveyard shift not exceeding twenty-five percent '37F( of the basic minimum wage on a per region basisE ') What is su(stituted Filin" of income ta! returns )*#R)? 9ubstituted !iling of #T0 is the manner by which declaration of income of individuals receiving purely compensation income which have been withheld by their employers the correct tax due+ is no longer required.#nstead of the filing of #ndividual #ncome Tax 0eturn '=#! !orm :688( + the employerGs annual information return '=#0 !orm )o. :B82-C!( duly stamped received by the =#0 may be considered as the HsubstituteI #ncome Tax 0eturn '#T0( of the employee+ inasmuch as the information provided therein are exactly the same information required to be provided in his income tax return '=#0 !orm )o. :688(. +) Who are qualified to a,ail the su(stituted filin"? Employees who satisfies all of the following conditions< a. 0eceiving purely compensation income regardless of amountE b. Working for only one employer in the &hilippines for the calendar yearE c. Withholding tax has been withheld correctly by the employer 'tax due equals tax withheld(E d. The employeeGs spouse also complies with all three '5( conditions stated above. e. The employer files the annual information return '=#0 !orm )o. :B82-C!( f. The employer issues =#0 !orm 35:B to each employee. -) What income payments are su(.ect to /!panded Withholdin" #a!? a( &rofessional fees talent fees for services rendered by the following< - Those individually engaged in the practice of profession or callings such as lawyers+certified public accountants+ doctors of medicine+ architecs+ engineers and all other professionals who have undergone licensure examinations regulated by the &rofessional 0egulations Commission+ 9upreme Court+ etc. - &rofessional entertainers such as but not limited to actors and actresses+ singers+ lyricist+ composers and emcees - &rofessional athletes including basketball players+ pelotaris and "ockeys - Directors and producers involved in movies+ stage+ radio+ television and musical

productions - #nsurance agents and insurance ad"usters - %anagement and technical consultants - =ookkeeping agents and agencies - ,ther recipient of talent fees - !ees of directors who are not employees of the company paying such fees whose duties are confined to attendance at and participation in the meetings of the =oard of Directors b( &rofessional fees+ talent fees+ etc for services of taxable "uridical persons c( 0entals< -0ental of real property used in business -0ental of personal properties in excess of & :8+888 annually -0ental of poles+ satellites and transmission facilities -0ental of billboards d( Cinematographic film rentals and other payments e( #ncome payments to certain contractors - $eneral engineering contractors - $eneral building contractors - 9pecialty contractors - ,ther contractors like< :. !illing+ demolition and salvage work contractors and operators of mine drilling apparatus 3. ,perators of dockyards 5. &ersons engaged in the installation of water system+ and gas or electric light+ heat or power 2. ,perators of stevedoring+ warehousing or forwarding establishments 7. Transportation Contractors B. &rinters+ bookbinders+ lithographers and publishers+ except those principally engaged in the publication or printing of any newspaper+ maga?ine+ review or bulletin which appears at regular intervals+ with fixed prices for subscription and sale 6. *dvertising agencies+ exclusive of payments to media 1. %essengerial+ "anitorial+ security+ private detective+ credit and or collection agencies and other business agencies 4. #ndependent producers of television+ radio and stage performances or shows :8. #ndependent producers of C"inglesC ::. -abor recruiting agencies and or Hlabor-onlyI contractors :3. &ersons engaged in the installation of elevators+ central air conditioning units+ computer machines and other equipment and machineries and the maintenance services thereon :5. &ersons engaged in the sale of computer services+ computer programmers+ software developer designer+ etc. :2. &ersons engaged in landscaping services :7. &ersons engaged in the collection and disposal of garbage :B. T/ and radio station operators on sale of T/ and radio airtime+ and :6. T/ and radio blocktimers on sale of T/ and radio commercial spots f( #ncome distribution to the beneficiaries of estates and trusts g( $ross commission or service fees of customs+ insurance+ stock+ real estate+ immigration and commercial brokers and fees of agents of professional entertainers

h( #ncome payments to partners of general professional partnerships i( &ayments made to medical practitioners "( $ross selling price or total amount of consideration or its equivalent paid to the seller owner for the sale+ exchange or transfer of real property classified as ordinary asset k( *dditional income payments to government personnel from importers+ shipping and airline companies or their agents l( Certain income payments made by credit card companies m( #ncome payments made by the top 38+888 private corporations to their purchase of goods and services from their local resident suppliers other than those covered by other rates of withholding n( #ncome payments by government offices on their purchase of goods and services+ from local resident suppliers other than those covered by other rates of withholding o( Commission+ rebates+ discounts and other similar considerations paid granted to independent and exclusive distributors+ medical technical and sales representatives and marketing agents and sub-agents of multi level marketing companies. p( Tolling fees paid to refineries q( &ayments made by pre-need companies to funeral parlors r( &ayments made to embalmers by funeral parlors s( #ncome payments made to suppliers of agricultural products 'suspension not yet lifted( t( #ncome payments on purchases of mineral+ mineral products and quarry resources u( ,n gross amount of refund given by %E0*-C, to customers with active contracts as classified by %E0*-C,E v( #nterest income on the refund paid through direct payment or application against customers> billing by other electric Distribution .tilities in accordance with the rules embodied in E0C 0esolution )o. 1 series of 3881 dated June 2+ 3881 governing the refund of meter deposits which was approved and adopted by E0C in compliance with the mandate of *rticle 1 of the %agna Carta for 0esidential Electricity Consumers and *rticle 5.2.3 of D9,*0 exempting all electricity consumers+ whether residential or non-residential from the payment of meter deposit. w( #ncome payments made by the top 7+888 individual taxpayers to their purchase of goods and services from their local resident suppliers other than those covered by other rates of withholding x( #ncome payments made by political parties and candidates of local and national elections of all their campaign expenditures+ and income payments made by individuals or "uridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates 0) What income payments are su(.ect to Final Withholdin" #a!? a( #ncome &ayments to a Citi?en or to a 0esident *lien #ndividual< - #nterest on any peso bank deposit - 0oyalties - &ri?es Kexcept pri?es amounting to &:8+888 or less which is sub"ect to tax under 9ec. 32'*(':( of the Tax CodeL - Winnings 'except winnings from &hilippine Charity 9weepstake ,ffice and -otto(

- #nterest income on foreign currency deposit - #nterest income from long term deposit 'except those with term of five years or more( - Cash and or property dividends - Capital $ains presumed to have been reali?ed from the sale+ exchange or other disposition of real property b( #ncome &ayments to a )on-0esident *lien Engaged in Trade or =usiness in the &hilippines - ,n Certain &assive #ncome - cash and or property dividend - 9hare in the distributable net income of a partnership - #nterest on any bank deposits - 0oyalties - &ri?es 'except pri?es amounting to &:8+888 or less which is sub"ect to tax under 9ec. 37'*(':( of the Tax Code. - Winnings 'except from &hilippine Charity 9weepstake ,ffice and -otto( - #nterest on -ong Term Deposits 'except those with term of five years or more( - Capital $ains presumed to have been reali?ed from the sale+ exchange or other disposition of real property c( #ncome Derived from *ll 9ources Within the &hilippines by a )on-0esident *lien #ndividual )ot Engaged in Trade or =usiness - ,n gross amount of income derived from all sources within the &hilippines - ,n Capital $ains presumed to have been reali?ed from the sale+ exchange or disposition of real property located in the &hilippines d( #ncome Derived by *lien #ndividual Employed by a 0egional or *rea Aeadquarters and 0egional ,perating Aeadquarters of %ultinational Companies+ #ncome Derived by *lien #ndividual Employed by ,ffshore =anking .nits and #ncome of *liens Employed by !oreign &etroleum 9ervice Contractors and 9ubcontractors e( #ncome &ayment to a Domestic Corporation - #nterest from any currency bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements derived from sources within the &hilippines - 0oyalties derived from sources within the &hilippines - #nterest income derived from a depository bank under the Expanded !oreign Currency Deposit '!CD.( 9ystem - #ncome derived by a depository bank under the !CD. from foreign transactions with local commercial banks - ,n capital gains presumed to have been reali?ed from the sale+ exchange or other disposition of real property located in the &hilippines classified as capital assets+ including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value as determined in accordance with 9ec. B'E( of the )#0C+ whichever is higher

f( #ncome &ayments to a 0esident !oreign Corporation - ,ffshore =anking .nits - Tax on branch &rofit 0emittances - #nterest on any currency bank deposits and yield or any other monetary benefit from deposit substitute and from trust funds and similar arrangements and royalties derived from sources within the &hilippines - #nterest income on !CD. - #ncome derived by a depository bank under the expanded foreign currency deposits system from foreign currency transactions with local commercial banks g( #ncome Derived from all 9ources Within the &hilippines by a )on-0esident !oreign Corporation - $ross income from all sources within the &hilippines such as interest+ dividends+ rents+ royalties+ salaries+ premiums 'except re-insurance premiums(+ annuities+ emoluments or other fixed determinable annual+ periodic or casual gains+ profits and income or capital gainsE - $ross income from all sources within the &hilippines derived by a non-resident cinematographic film owner+ lessor and distributor - ,n the gross rentals+ lease and charter fees derived by a non-resident owner or lessor of vessels from leases or charters to !ilipino citi?ens or corporations as approved by the %aritime #ndustry *uthority - ,n the gross rentals+ charter and other fees derived by a non-resident lessor of aircraft+ machineries and other equipment - #nterest on foreign loans contracted on or after *ugust :+ :41B h( !ringe =enefits $ranted to the Employee 'except 0ank and !ile( - $oods+ services or other benefits furnished or granted in cash or in kind by an employer to an individual employee 'except rank and file( such as but not limited to the following< - Aousing - /ehicle of any kind - #nterest on loans - Expenses for foreign travel - Aoliday and vacation expenses - Educational assistance to employees or his dependents - %embership fees+ dues and other expense in social and athletic clubs or other - similar organi?ations - Aealth insurance i( #nformers 0eward 12) Aside from the required 3ithholdin" of income ta! (y "o,ernment a"encies and instrumentalities on their payments to their suppliers of "oods and ser,ices4 3hat other ta! types must (e 3ithheld (y them? a( /alue *dded Tax M on all payments sub"ect to /*T - ,n gross payments for the purchase of goods - ,n gross payments for the purchase of services

b( /*T M on payments for lease or use of properties or property rights to non-resident ownersE and other services rendered in the &hilippines by non-residents. c( &ercentage Tax M on all payments sub"ect to percentage tax such as payments to the following< - *ny person engaged in business whose gross sales or receipts do not exceed &:+788+888 and who are not /*T-registered persons. '&ersons exempt from /*T under 9ec. :84/ of the Tax Code( - Domestic carriers and keepers of garages+ except owners of bancas and owners of animal drawn two wheeled vehicle - ,perators of international carriers doing business in the &hilippines. - !ranchise grantees of electric+ gas or water utilities - !ranchise grantees of radio and or television broadcasting companies whose gross annual receipts of the preceding year do not exceed Ten %illion '&:8+888+888.88( &esos and did not opt to register as /*T Taxpayers - =anks and non-bank financial intermediaries and finance companies - -ife insurance companies - *gents of foreign insurance companies - &roprietor+ lessee+ or operator of cockpits+ cabarets+ night or day clubs+videoke karaoke bars+ karaoke television+ karaoke boxes+ music lounges and other similar establishments+ boxing exhibitions+ professional basketball games+ "aialai and race tracks - Every stock broker who effected a sale+ barter+ exchange or other disposition of shares of stock listed and traded through the -ocal 9tock Exchange '-9E( other than the sale by a dealer in securities - * corporate issuer stock broker+ whether domestic or foreign+ engaged in the sale+ barter+ exchange or other disposition through #nitial &ublic ,ffering '#&,( secondary public offering of shares of stock in closely held corporations 11) Who is a 3ithholdin" a"ent?

d( To !ile *nnual 0eturn - withholding agent is required to file the corresponding *nnual #nformation 0eturn at the time prescribed by law and regulations e( To #ssue Withholding Tax Certificates - withholding agent shall furnish Withholding Tax Certificates to recipient of income payments sub"ect to withholding 13) Who are considered #56 224222 Corporate #a!payers? Top twenty thousand '38+888( private corporations shall include a corporate taxpayer who has been determined and notified by the =ureau of #nternal 0evenue '=#0( as having satisfied any of the following criteria< a( Classified and duly notified by the Commissioner as a large taxpayer under 0evenue 0egulation )o. :-41+ as amended+ or belonging to the top five thousand '7+888( private corporations under 00:3-42+ or to the top ten thousand ':8+888( private corporations under 00 :6-3885+ unless previously de-classified as such or had already ceased business operations 'automatic inclusion(E b( /*T payment or payable whichever is higher+ of at least &:88+888 for the preceding yearE c( *nnual income tax due of at least &388+888 for the preceding yearE d( Total percentage tax paid of at least &:88+888 for the preceding yearE e( $ross sales of &:8+888+888 and above for the preceding yearE f( $ross purchases of &7+888+888 and above for the preceding yearE g( Total excise tax payment of at least &:88+888 for the preceding year. 1 7 What are the o(li"ations of #op 224222 Corporate #a!payers?

* withholding agent is any person or entity who is required to deduct and remit the taxes withheld to the government. 12) What are the duties and o(li"ations of the 3ithholdin" a"ent? The following are the duties and obligations of the withholding agent< a( To 0egister - withholding agent is required to register within ten ':8( days after acquiring such status with the 0evenue District office having "urisdiction over the place where the business is located b( To Deduct and Withhold - withholding agent is required to deduct tax from all money payments sub"ect to withholding tax c( To 0emit the Tax Withheld - withholding agent is required to remit tax withheld at the time prescribed by law and regulations

a( #n addition to the above responsibilities of a withholding agent+ Top 38+888 private corporations shall withhold the one percent ':F( creditable expanded withholding tax on the purchase of goods and two percent '3F( on the purchase of services 'other than those covered by other withholding tax rates( from local suppliers where it regularly makes purchases. Aowever+ casual purchase of goods shall not be sub"ect to withholding tax unless the amount of purchase at any one time involves &:8+888 or more+ in which case+ it shall then be required to withhold the tax. The same rule apply to local resident supplier of services other than those covered by separate rates of withholding tax.&rovided+ however+ that for purchases involving agricultural products in their original state+ the tax required to be withheld shall only apply to purchases in excess of the cumulative amount of &588+888 within the same taxable year. !or this purpose+ agricultural products in their original state shall only include corn+ coconut+ copra+ palay+ rice cassava+ sugar cane+ coffee+ fruits+ vegetables+ marine food products+ poultry and livestocks.

b( Taxes withheld shall be remitted using =#0 !orm :B8:-E on a monthly basis thru the use of the Electronic !iling and &ayment 9ystem 'E!&9( on the dates prescribed for e-filers. !iling shall be done on a staggered basis provided under 00 3B-3883 and payment shall be made every :7th day following the end of the month for Jan-)ov and Jan. 38 of the following year for the month of December. c( Certificate of Creditable Tax Withheld at 9ource '=#0 !orm )o. 3586( shall be issued to the payees within twenty '38( days following the close of such payeesG taxable quarter or upon demand of the payeesE d( * list of regular supplier of goods and or services shall be submitted on a semestral basis to the 0D, -T9 -TD, having "urisdiction over the principal place of business in hard copy if below ten payees or soft-copy for those with ten ':8( or more payees per semester while e-submission regardless of the number of payees for those under Electronic !iling and &ayment 9ystem 'E!&9(. Deadline for submission of the list is not later than July 5: and January 5: of each year. Aowever+ initial list of regular suppliers should be submitted within fifteen ':7( days from actual receipt hereof. 1$7 Who are considered #56 $4222 *ndi,idual #a!payers? Top 7+888 #ndividual Taxpayers shall refer to individual taxpayers engaged in trade or business or exercise of profession who have been determined and notified by the =ureau of #nternal 0evenue '=#0( as having satisfied any of the following criteria< a( /*T payment or payable whichever is higher+ of at least &:88+888 for the preceding yearE b( *nnual income tax due of at least &388+888 for the preceding yearE c( Total percentage tax paid of at least &:88+888 for the preceding yearE d( $ross sales of &:8+888+888 and above for the preceding yearE e( $ross purchases of &7+888+888 and above for the preceding yearE f( Total excise tax payment of at least &:88+888 for the preceding year. 1'7 What are the o(li"ations of #op $4222 *ndi,idual #a!payers? a( #n addition to the obligations of a withholding agent+ Top 7+888 #ndividual Taxpayers shall withhold the one percent ':F( creditable expanded withholding on the purchase of goods and two percent '3F( on the purchase of services 'other than those covered by other withholding tax rates( from local suppliers where it regularly makes purchases. Aowever+ casual purchase of goods shall not be sub"ect to withholding tax unless the amount of purchase at any one time involves &:8+888 or more+ in which case+ it shall then be required to withhold the tax. The same rule apply to local resident supplier of services other than those covered by separate rates of withholding tax. &rovided+ however+ that for purchases involving agricultural products

in their original state+ the tax required to be withheld shall only apply to purchases in excess of the cumulative amount of &588+888 within the same taxable year. !or this purpose+ agricultural products in their original state shall only include corn+ coconut+ copra+ palay+ rice cassava+ sugar cane+ coffee+ fruits+ vegetables+ marine food products+ poultry and livestocks. b( Taxes withheld shall be remitted under =#0 !orm :B8:-E on a monthly basis thru the Electronic !iling and &ayment 9ystem 'E!&9( facility within the prescribed period. c( Certificate of Creditable Tax Withheld at 9ource '=#0 !orm )o. 3586( shall be issued to the payees within twenty '38( days following the close of such payeesG taxable quarter or upon demand of the payeesE d( * list of regular supplier of goods and or services shall be submitted on a semestral basis to the 0D, -T9 -TD, having "urisdiction over the principal place of business in hard copy if below ten payees or soft-copy for those with ten ':8( or more payees per semester while e-submission regardless of the number of payees for those under Electronic !iling and &ayment 9ystem 'E!&9(. Deadline for submission of the list is not later than July 5: and January 5: of each year. Aowever+ initial list of regular suppliers should be submitted within fifteen ':7( days from actual receipt hereof. 1$7 W85 AR/ #8/ R/965:9*&;/ 5FF*C*A;9 *: #8/ <5=/R:%/:# 5FF*C/9 C8AR</D W*#8 #8/ D>#? #5 D/D>C#4 W*#885;D A:D R/%*# W*#885;D*:< #A@/9? The following officials are duty bound to deduct+ withhold and remit taxes< a( !or ,ffice of the &rovincial $overnment-province- the Chief *ccountant+ &rovincial Treasurer and the $overnorE b( !or ,ffice of the City $overnment-cities- the Chief *ccountant+ City Treasurer and the City %ayorE c( !or ,ffice of the %unicipal $overnment-municipalities- the Chief *ccountant+ %unicipal Treasurer and the %ayorE d( ,ffice of the =arangay-=arangay Treasurer and =arangay Captain e( !or )$*s+ $,CCs and other $overnment ,ffices+ the Chief *ccountant and the Aead of ,ffice or the ,fficial holding the highest position.

1'7 Who are not su(.ect to Withholdin" #a! on Compensation? *ny employee whose total compensation income does not exceed the statutory minimum wage of !ive Thousand '& 7+888.88( &esos a month or 9ixty Thousand '& B8+888.88( &esos a year is not sub"ect to Withholding Tax on Compensation. ),TE< Employee whose total annual compensation does not exceed & B8+888 shall be given two options with which to pay his income tax due as follows< N Ais compensation income shall be sub"ected to withholding tax+ but he shall not be required to file the income return prescribed in 9ection 7: of the Code 'filing of an individual return( except when covered by any of the situations enumerated in 9ec. 3.15.2 of 0evenue 0egulations )o. 3-41+ or N Ais compensation income shall not be sub"ect to withholding tax but he shall file his annual income tax return and pay the tax due thereon+ annually. When the employee has opted to have his compensation income sub"ected to Withholding tax so as to be relieved of the obligation of filing an annual #ncome Tax return and paying his tax due on a lump sum basis+ he shall execute a waiver in a prescribed =#0 !orm of his exemption's( from withholding+ which shall constitute the authority for the employers to apply the withholding tax table provided under 0evenue 0egulations )o. 3-41. 1+7 What income payments are su(.ect to Final Withholdin" #a!? a( #ncome &ayments to a Citi?en or to a 0esident *lien #ndividual< N #nterest on any peso bank deposit N 0oyalties N &ri?es 'except pri?es amounting to &:8+888 or less which is sub"ect to tax under 9ec. 37'*(':( of the Tax Code N Winnings 'except from &hilippine Charity 9weepstake ,ffice and -otto( N #nterest income on foreign currency deposit N #nterest income from long term deposit N Cash and or property dividends N Capital $ains presumed to have been reali?ed from the sale+ exchange or other disposition of real property b( #ncome &ayments to a )on-0esident *lien Engaged in Trade or =usiness in the &hilippines N ,n Certain &assive #ncome - cash and or property dividend - 9hare in the distributable net income of a partnership - #nterest on any bank deposits - 0oyalties - &ri?es 'except pri?es amounting to &:8+888 or less which is sub"ect to tax under 9ec.

37'*(':( of the Tax Code. - Winnings 'except from &hilippine Charity 9weepstake ,ffice and -otto( N #nterest on -ong Term Deposits N Capital $ains presumed to have been reali?ed from the sale+ exchange or other disposition of real property c( #ncome Derived from *ll 9ources Within the &hilippines by a )on-0esident *lien #ndividual )ot Engaged in Trade or =usiness N ,n gross amount of income derived from all sources within the &hilippines N ,n Capital $ains presumed to have been reali?ed from the sale+ exchange or disposition of real property located in the &hilippines d( #ncome Derived by *lien #ndividual Employed by a 0egional or *rea Aeadquarters and 0egional ,perating Aeadquarters of %ultinational Companies e( #ncome Derived by *lien #ndividual Employed by ,ffshore =anking .nits f( #ncome of *liens Employed by !oreign &etroleum 9ervice Contractors and 9ubcontractors g( #ncome &ayment to a Domestic Corporation N #nterest from any currency bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements derived from sources within the &hilippines N 0oyalties derived from sources within the &hilippines N #nterest income derived from a depository bank under the Expanded !oreign Currency Deposit '!CD.( 9ystem N #ncome derived by a depository bank under the !CD. from foreign transactions with local commercial banks N ,n capital gains presumed to have been reali?ed from the sale+ exchange or other disposition of real property located in the &hilippines classified as capital assets+ including pacto de retro sales and other forms of conditional sales based on the gross selling price or fair market value as determined in accordance with 9ec. B'E( of the )#0C+ whichever is higher h( #ncome &ayments to a 0esident !oreign Corporation N ,ffshore =anking .nits N Tax on branch &rofit 0emittances N #nterest on any currency bank deposits and yield or any other monetary benefit from deposit substitute and from trust funds and similar arrangements and royalties derived from sources within the &hilippines N #nterest income on !CD. N #ncome derived by a depository bank under the expanded foreign currency deposits system from foreign currency transactions with local commercial banks i( #ncome Derived from all 9ources Within the &hilippines by a )on-0esident !oreign Corporation N $ross income from all sources within the &hilippines such as interest+ dividends+

rents+ royalties+ salaries+ premiums 'except re-insurance premiums(+ annuities+ emoluments or other fixed determinable annual+ periodic or casual gains+ profits and income or capital gainsE N $ross income from all sources within the &hilippines derived by a non-resident cinematographic film owner+ lessor and distributor N ,n the gross rentals+ lease and charter fees derived by a non-resident owner or lessor of vessels from leases or charters to !ilipino citi?ens or corporations as approved by the %aritime #ndustry *uthority N ,n the gross rentals+ charter and other fees derived by a non-resident lessor of aircraft+ machineries and other equipment N #nterest on foreign loans contracted on or after *ugust :+ :41B "( !ringe =enefits $ranted to the Employee 'except 0ank and !ile( N $oods+ services or other benefits furnished or granted in cash or in kind by an employer to an individual employee 'except rank and file( such as but not limited to the following< - Aousing - /ehicle of any kind - #nterest on loans - Expenses for foreign travel - Aoliday and vacation expenses - Educational assistance to employees or his dependents - %embership fees+ dues and other expense in social and athletic clubs or other - similar organi?ations - Aealth insurance - #nformers 0eward 1-7 What are the types of 3ithholdin" ta! on "o,ernment money payments? a( Withholding of Creditable /alue *dded Tax N ,n gross payments for the purchase of goods N ,n gross payments for the purchase of services N &ayments made to government public works contractors N &ayments for lease or use of property or property rights to non-resident owners b( Withholding of &ercentage Tax O &ayments to the following< N *ny person engaged in business whose gross sales or receipts do not exceed & 778+888 and who are not /*T-registered persons. '&ersons exempt from /*T under 9ec. :84? of the Tax Code( N Domestic carriers and keepers of garages+ except owners of bancas and owners of animal drawn two wheeled vehicle N ,perators of international carriers doing business in the &hilippines. N !ranchise grantees of electric+ gas or water utilities N !ranchise grantees of radio and or television broadcasting companies whose gross annual receipts of the preceding year do not exceed Ten %illion '&:8+888+888.88( &esos and did not opt to register as /*T Taxpayers N =anks and non-bank financial intermediaries and finance companies

N -ife insurance companies N *gents of foreign insurance companies N &roprietor+ lessee+ or operator of cockpits+ cabarets+ night or day clubs+ boxing exhibitions+ professional basketball games+ "ai-alai and race tracks N Every stock broker who effected a sale+ barter+ exchange or other disposition of shares of stock listed and traded through the -ocal 9tock Exchange '-9E( other than the sale by a dealer in securities N * corporate issuer stock broker+ whether domestic of foreign+ engaged in the sale+ barter+ exchange or other disposition through #nitial &ublic ,ffering '#&,( secondary public offering of shares of stock in closely held corporations.

D/9CR*6#*5: /alue-*dded Tax is a form of sales tax. #t is a tax on consumption levied on the sale of goods and services and on the imports of goods into the &hilippines. #t is an indirect tax+ which can be passed on to the buyer. W85 AR/ R/Q>*R/D #5 F*;/ =A# R/#>R:9; Every person or entity who in the course of his trade or business+ sells or leases goods+ properties and services sub"ect to /*T+ if the aggregate amount of actual gross sales or receipts exceed !ive Aundred !ifty Thousand &esos '& 778+888.88( for any twelve month periodE * person required to register as /*T taxpayer but failed to registerE * person who imports goods &rofessional practitioners
&rofessional &ractitioners '&&s( are formerly classified as non-/*T taxpayers and were exempt from the /alue-*dded Tax and &ercentage taxes under 9ection :84 of the )ational #nternal 0evenue Code 'hereinafter referred to as the Code(+ until December 5:+ 3883. &rior to this date+ they were sub"ect only to #ncome Tax under 9ection 32 of the Code. Effective January :+ 3885+ however+ by virtue of 0epublic *ct )os. 66:B and 48:8+ which were implemented by 0evenue 0egulation )os. :-3885 and 5-3885+ services of &&s are also sub"ect to either /*T 'if gross professional fees exceed & 778+888.88 for a :3-month period( or 5F &ercentage Tax 'if gross professional fees totals & 778+888 and below for a :3-month period(+ depending on their gross professional fee for a twelve ':3( - month period. C&rofessional &ractitionersC include the following< N Certified &ublic *ccountants N -awyers N Doctors N #nsurance *gents '-ife @ )on-life( N ,ther &rofessional &ractitioners required to pass the government examination N ,thers

#n places where there are no **=s+ it shall be filed with and the tax paid to the 0evenue Collection ,fficer or duly *uthori?ed City or %unicipal Treasurer of the place where the 0D, is located. 3) What is Coutput ta!C? ,utput tax means the /*T due on the sale+ lease or exchange of taxable goods or properties or services by any person registered or required to register under section 35B of the Tax Code. ) What is Cinput ta!C? #nput tax means the /*T paid by a /*T-registered person in the course of his trade or business on importation of goods or local purchase of goods or services+ including lease or use of property+ from a /*T-registered person. #t shall also include the transitional input tax determined in accordance with 9ection ::: of the Tax Code. $) What comprises C"oods or propertiesC? The term Cgoods or propertiesC shall mean all tangible and intangible ob"ects+ which are capable of pecuniary estimation and shall include< a( 0eal properties held primarily for sale to customers or held for lease in the ordinary course of trade or business b( The right or the privilege to use patent+ copyright+ design or model+ plan+ secret formula or process+ goodwill+ trademark+ trade brand or other like property or right c( The right or the privilege to use in the &hilippines any industrial+ commercial or scientific equipment d( The right or the privilege to use motion picture film+ films+ tapes and discs e( 0adio+ television+ satellite transmission and cable television time. ') What comprises Csale or e!chan"e of ser,icesC? The term Csale or exchange of servicesC means the performance of all kinds of services in the &hilippines for others for a fee+ remuneration or consideration+ including those performed or rendered by the following< a( Construction and service contractors b( 9tock+ real estate+ commercial+ customs and immigration brokers c( -essors of property+ whether personal or real d( Warehousing services e( -essors or distributors of cinematographic films f( &ersons engaged in milling+ processing+ manufacturing or repacking goods for others g( &roprietors+ operators or keepers of hotels+ motels+ resthouses+ pension houses+ inns+ resorts h( &roprietors or operators of restaurants+ refreshment parlors+ cafes and other eating places+ including clubs and caterers i( Dealers in securities "( -ending investors k( Transportation contractors on their transport of goods or cargoes+ including persons who transport goods or cargoes for hire and other domestic common carriers by land+ air and water relative to their transport of goods or cargoes l( 9ervices of franchise grantees of telephone and telegraph+ radio and television

FR/Q>/:#;? A9A/D Q>/9#*5:9 #. $eneral /*T Pueries 1) Who are required to file =A# returns andBor pay =A#? N Every person or entity who in the course of his trade or business+ sells or leases goods+ properties and services sub"ect to /*T+ if the aggregate amount of actual gross sales or receipts exceed !ive Aundred !ifty Thousand &esos '& 778+888.88( for any twelve month periodE N * person required to register as /*T taxpayer but failed to registerE and N * person who imports goods. 2) Where are =A# returns filed? The %onthly /*T Declaration '=#0 !orm 3778%( and Puarterly /*T 0eturn '=#0 !orm 3778P( shall be filed with any *uthori?ed *gent =ank '**=( in the place where the taxpayer is registered or required to be registered. #n cases of no-payment+ the return shall be filed with the 0evenue District ,ffice '0D,( -TD, and -T*D where the taxpayer is registered or required to be registered.

broadcasting and all other franchise grantees except those under 9ection ::4 of the Tax Code m( 9ervices of banks+ non-bank financial intermediaries and finance companies n( 9ervices of non-life insurance companies 'except their crop insurances(+ including surety+ fidelity+ indemnity and bonding companies o( 9imilar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties The phrase Csale or exchange of servicesC shall include< a( The lease or the use of or the right or privilege to use any copyright+ patent+ design or model+ plan+ secret formula or process+ goodwill+ trademark+ trade brand or other like property or right b( The lease or the use of+ or the right to use of any industrial+ commercial or scientific equipment c( The supply of scientific+ technical+ industrial or commercial knowledge or information d( The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the application or en"oyment of any such property+ or right or any such knowledge or information e( The supply of services by a nonresident person or his employee in connection with the use of property or rights belonging to+ or the installation or operation of any brand+ machinery or other apparatus purchased from such non-resident person f( The supply of technical advice+ assistance or services rendered in connection with technical management or administration of any scientific+ industrial or commercial undertaking+ venture+ pro"ect or scheme g( The lease of motion picture films+ films+ tapes and discs h( The lease or the use of or the right to use radio+ television+ satellite transmission and cable television time. +) What is a DeroErated sale? #t is a sale+ barter or exchange of goods+ properties and or services sub"ect to 8F /*T pursuant to 9ections :8B '*( '3( and :81 '=( of the Tax Code. -) What transactions are considered as DeroErated sales? The following services performed in the &hilippines by /*T-registered persons shall be sub"ect to ?ero percent '8F( rate< a( &rocessing+ manufacturing or repacking goods for other persons doing business outside the &hilippines which goods are subsequently exported where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the =angko 9entral ng &ilipinas '=9&( b( 9ervices other than those mentioned in the preceding paragraph+ the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the =angko 9entral ng &ilipinas '=9&( c( 9ervices rendered to persons or entities whose exemption under special laws or international agreements to which the &hilippines is a signatory effectively sub"ects the supply of such services to ?ero percent '8F( rate d( 9ervices rendered to vessels engaged exclusively in international shipping e( 9ervices performed by subcontractors and or contractors in processing+ converting+

or manufacturing goods for an enterprise whose export sales exceeds seventy percent '68F( of total annual production. N The following sales shall be sub"ect to ?ero percent '8F( rate< a( 9ale of goods which are directly shipped by a /*T-registered resident to a place outside the &hilippines b( 9ale of goods which are considered as CdeemedC export sales by a /*T-registered person to certain entities who are also residents of the &hilippines< N 9ales to export-oriented enterprises which the Code considers as export sales at the level of the supplier of raw materials N 9ales to entities+ the exemption of which+ under a special law or an international agreement with the $overnment of the &hilippines+ effectively ?ero rates such sales N 9ales of gold to the =angko 9entral ng &ilipinas N !oreign currency denominated sales of goods c( 9ales considered as exportation of goods under a special law such as Executive ,rder )o. 33B ',mnibus #nvestments Code of :416( and 0epublic *ct )o. 64:B '&EQ* -aw( 0) Where 3ill ta!payers file their applications for =A# DeroEratin"? Taxpayers may file their application with the *udit #nformation+ Tax Exemption and #ncentives Division '*#TE#D( at the =#0 )ational ,ffice. 12) What is a ContractorFs Final 6ayment Release Certificate and 3here should ta!payers file their application for this? The Contractor>s !inal &ayment 0elease Certificate is issued by the =#0 before a government contractor is fully paid for his contract with the government. Taxpayers may file their application at the =#0 )ational ,ffice at the *udit #nformation+ Tax Exemption and #ncentives Division '*#TE#D( 11) What transactions are considered as deemed sales? The following transactions are considered as deemed sales< a( Transfer+ use or consumption+ not in the course of business+ of goods or properties originally intended for sale or for use in the course of business b( Distribution or transfer to< N 9hareholders or investors as share in the profits of the /*T-registered personE or N Creditors in payment of debt c( Consignment of goods if actual sale is not made within sixty 'B8( days following the date such goods were consigned d( 0etirement from or cessation of business+ with respect to inventories of taxable goods existing as of such retirement or cessation 12) What is =A#Ee!empt sale? #t is a sale of goods+ properties or service and the use or lease of properties which is not sub"ect to output tax and whereby the buyer is not allowed any tax credit or input tax related to such exempt sale.

13) What are the =A#Ee!empt transactions? a( 9ale of non-food agricultural products+ marine and forest products in their original state by the primary producer or owner of the land where the same were produced E b( 9ale of cotton and cotton seeds in their original state and copraE c( 9ale 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 and breeding stock and generic materials thereofE d( 9ale or importation of fertili?ersE seeds+ seedlings and fingerlingsE fish+ prawn+ livestock and poultry feeds+ including ingredients+ whether locally produced or imported+ used in the manufacture of finished feeds 'except specialty feeds for race horses+ fighting cocks+ aquarium fish+ ?oo animals and other animals generally considered as pets(E e( 9ale or importation of coal and natural gas+ in whatever form or estate+ and petroleum products 'except lubricating oil+ processed gas+ grease+ wax and petrolatum( sub"ect to the Excise Taxes imposed under Title /# of the Tax CodeE f( 9ale or importation of raw materials to be used by the buyer or importer himself in the manufacture of petroleum products sub"ect to excise tax+ except lubricating oil+ processed gas+ grease+ wax and petrolatumE g( #mportation of passenger and or cargo vessels of more than five thousand tons+ whether coastwise or ocean-going+ including engine and spare parts of said vessel to be used by the importer himself as operator thereofE h( #mportation of personal and household effects belonging to residents of the &hilippines returning from abroad and nonresident citi?ens coming to resettle in the &hilippinesE &rovided+ that such goods are exempt from customs duties under the Tariff and Customs Code of the &hilippinesE i( #mportation of professional instruments and implements+ wearing apparel+ domestic animals+ and personal household effects 'except any vehicle+ vessel+ aircraft+ machinery+ other goods for use in the manufacture and merchandise of any kind in commercial quantity( belonging to persons coming to settle in the &hilippines+ for their own use and not for sale+ barter or exchange+ accompanying such persons+ or arriving within ninety '48( days before or after their arrival+ upon the production of evidence satisfactory to the Commissioner of #nternal 0evenue+ that such persons are actually coming to settle in the &hilippines and that the change of residence is bona fideE "( 9ervices sub"ect to percentage tax under Title / of the CodeE k( 9ervices by the agricultural contract growers and milling for others of palay into rice+ corn into grits+ and sugar cane into raw cane sugarE l( %edical+ dental+ hospital and veterinary services sub"ect to the provisions of 9ec. :6 of 0* 66:B+ as amendedE m( Educational services rendered by private educational institutions+ duly accredited by the Dept. of Education Culture and 9ports 'DEC9(+ and Commission on Aigher Education 'CAED(+ and those rendered by the government educational institutions n( 9ale by the artist himself of his works of art+ literary works+ musical compositions and similar creations+ or his services performed for the production of such worksE o( 9ervices rendered by individuals pursuant to an employer-employee relationship p( 9ervices rendered by regional or area headquarters established in the &hilippines by multinational corporations which act as supervisory communications and coordinating centers for their affiliates+ subsidiaries or branches in the *sia-&acific 0egion and do

not earn or derive income from the &hilippinesE q( Transactions which are exempt under international agreements to which the &hilippines is a signatory+ or under special laws+ except those under the following laws< N &.D. )o. BB - Export &rocessing Qone *uthority 'E&Q*( registered firms N &.D. )o. 734 - &etroleum Exploration Concessionaires under the &etroleum *ct of :424 N &.D. )o. :748 - &hilippine *irlines '&*-( relative to domestic transport of goods or cargoes r( 9ales by agricultural cooperatives duly registered with the Cooperative Development *uthority 'CD*( to their members as well as sale of their produce+ whether in its original state or processed form+ to non-membersE their importation of direct farm inputs+ machineries and equipment+ including spare parts thereof+ to be used directly and exclusively in the production and or processing of their produceE s( 9ales by electric cooperatives duly registered with the Cooperative Development *uthority 'CD*( or )ational Electrification *dministration ')E*(+ relative to the generation and distribution of electricity+ as well as their importation of machineries and equipment+ including spare parts+ which shall be directly used in the generation and distribution of electricityE t( $ross receipts from lending activities by credit or multi-purpose cooperatives duly registered with the Cooperative Development *uthority 'CD*( whose lending operation is limited to their membersE u( 9ales by non-agricultural+ non-electric and non-credit cooperatives duly registered with the Cooperative Development *uthority< &rovided+ that the share capital contribution of each member does not exceed !ifteen Thousand &esos '& :7+888( and regardless of the aggregate capital and net surplus ratably distributed among the membersE v( Export sales by persons who are not /*T-registeredE w( -ease of a residential unit with a monthly rental not exceeding Eight Thousand &esos '& 1+888.88(+ regardless of the amount of aggregate rentals received by the lessor during the year+ provided that the exemptions likewise applies to lease of residential units where the monthly rental per unit exceeds & 1+888.88 but the aggregate rentals of the lessor during the year do not exceed & 778+888.88.E x( 9ale+ importation+ printing or publication of books and any newspaper+ maga?ine+ review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of paid advertisementsE y( 9ale or 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 does not exceed the amount of & 778+888.88E ?( 9ale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business or real property utili?ed for low-cost and sociali?ed housing as defined by 0epublic *ct )o. 6364+ otherwise known as the .rban Development and Aousing *ct of :443 and other related laws+ house and lot and other residential dwelling valued at & :+888+888 and below.

##. 0E-#E!-0elated Pueries 1) What is FR/;*/FC? 0E-#E! means 0econciliation of -istings for Enforcement. #t supports the third party information program of the =ureau through the cross referencing of third party information from the taxpayers> 9ummary -ists of 9ales and &urchases prescribed to be submitted on a quarterly basis. 2) Who are required to su(mit 9ummary ;ist of 9ales? /*T taxpayers with quarterly total sales receipts 'net of /*T( exceeding Two %illion !ive Aundred Thousand &esos '& 3+788+888( are required to submit a 9ummary -ist of 9ales. 3) Who are required to su(mit 9ummary ;ist of 6urchases? /*T taxpayers with quarterly total purchases 'net of /*T( exceeding ,ne %illion &esos '& :+888+888( are required to submit 9ummary -ist of &urchases. ) What are the 9ummary ;ists required to (e su(mitted? a( Puarterly 9ummary -ist of 9ales to 0egular =uyers Customers and Casual =uyers Customers and ,utput TaxE b( Puarterly 9ummary -ist of -ocal &urchases and #nput taxE and c( Puarterly 9ummary -ist of #mportation $) Who are CCasual &uyersBCustomers?C Casual =uyers Customers refer to buyers customers who are engaged in business exercise of profession but did not qualify as regular buyers customers+ the amount of individual transaction is & :88+888 or more but did not qualify as regular buyers customers. ') Who are CRe"ular &uyersBCustomersC? They shall refer to buyers customers who are engaged in business or exercise of profession with whom the taxpayer has transacted at least six 'B( transactions in the previous year or current year+ regardless of the amount of sale per transaction. +) What are the contents of the Quarterly 9ummary ;ist of 9ales to Re"ular &uyersBCustomers and Casual &uyersBCustomers and 5utput #a!? The Puarterly 9ummary -ist of 9ales to regular buyers customers and casual buyers customers and output tax shall indicate the following< a( =#0 0egistered )ame of the =uyer who is engaged in business exercise of profession b( T#) of the =uyer for sales sub"ect to /*T c( Exempt 9ales d( Qero-0ated 9ales e( 9ales 9ub"ect to /*T 'exclusive of /*T( f( ,utput Tax '/*T on 9ales(

-) What are the contents of the Quarterly 9ummary ;ist of ;ocal 6urchases and *nput #a!? The Puarterly 9ummary -ist of -ocal &urchases and #nput Tax shall indicate the following< a( =#0 0egistered )ame of the 9eller 9upplier 9ervice &rovider b( *ddress of 9eller 9upplier 9ervice &rovider c( Taxpayer #dentification )umber 'T#)( of the 9eller d( Exempt &urchases e( Qero-0ated &urchases f( &urchases 9ub"ect to /*T 'Exclusive of /*T( N ,n 9ervices N ,n Capital $oods N ,n $oods and ,ther than Capital $oods g( Creditable #nput Tax h( )on-Creditable #nput Tax 0) What are the contents of the Quarterly 9ummary ;ist of *mportations? The Puarterly 9ummary -ist of #mportations shall indicate the following< a( #mport Entry Declaration )umber b( *ssessment 0elease Date c( Date of importation d( )ame of 9eller e( Country of ,rigin f( Dutiable /alue g( *ll Charges =efore release from the Customs> Custody h( -anded Cost< N Exempt N Taxable '9ub"ect to /*T( i( /*T &aid "( ,fficial 0eceipt ',0( )o. of the ,fficial 0eceipt Evidencing &ayment of the Tax k( Date of /*T &ayment 12) When and 3here 3ill ta!payers fileBsu(mit the Quarterly 9ummary ;ist of 9ales and 6urchases? The quarterly summary list of sales or purchases whichever is applicable shall be submitted to the 0D, or -TD, or -T*D having "urisdiction over the taxpayer on or before the twenty-fifth '37th( day of the month following the close of each taxable quarter. 11) Can the =A# 3ithheld and paid for the nonEresident recipient4 3hich =A# is passed on to the resident 3ithholdin" a"ent (y the nonEresident recipient of the income4 (e claimed as an input ta!? Res. #t can be claimed as an input tax by the said /*T registered Withholding *gent upon filing his own /*T return+ sub"ect to the rules on allocation of input tax among taxable+ ?ero-rated and exempt sales.

12) Are all =alue Added #a!payers required to mandatorily file the summary list in ma"netic form usin" 37$ inch floppy diskette? Res. 9ubmission of the summary list in diskette form shall be required for the taxable quarter where the total sales 'taxable net of /*T+ ?ero-rated+ exempt( exceed & 3+788+888 or total purchases 'taxable net of /*T+ ?ero-rated+ exempt( exceed & :+888+888. 13) What is the clearEcut rule on the mandatory su(mission of summary lists in diskette form? The following are the rules in the submission of the said summary lists< a( They are required to submit the said summary lists in diskette form for the taxable quarter where the total sales 'taxable net of /*T+ ?ero-rated+ exempt( exceed & 3+788+888 or total purchases 'taxable net of /*T+ ?ero-rated+ exempt( exceed & :+888+888. b( Those who did not meet the threshold need not file summary listsE however+ if there is a taxable quarter where aforesaid /*T taxpayers meet or exceed the threshold+ they will be required to submit the prescribed electronic format on such taxable quarter and on the next three '5( succeeding taxable quarters+ regardless of whether or ),T such succeeding taxable quarter sales and or purchases meet exceed the threshold. 1 ) What is the penalty for failure to su(mit the quarterly summary list in the prescri(ed manner? *dministrative &enalty & :+888 - !or each failure to file+ keep or supply the required documents *ggregate amount not to exceed & 37+888 for the taxable year Criminal &enalty Willful failure to keep any record or to supply the information at the time or times required shall be sub"ect to the criminal penalty under the Tax Code of :446. SCompromise on such violation 9A*-- ),T relieve the violating taxpayer from the obligation to submit the required documents. *=7 =A# on 6rofessionals 1) 8o3 to compute the =A# on professionals? The general formula is< ,utput Taxes - #nput Taxes T /*T &ayable !ees and Expenses including /*T< 'a( &rofessional !ee with /*T x : :: ,utput Tax -ess< &rofession-related Expenses x : :: 'with /*T 0eceipts( #nput Tax Difference /*T &ayable !ees and Expenses excluding /*T< 'b( &rofessional !ee x :8F ,utput Tax -ess< &rofession-related Expenses x :8F 'with /*T 0eceipts( #nput Tax Difference /*T &ayable ),TE< 'a( Computation is in accordance with 9ecs. :8BD and :81C of the Code.

'b( Computation per /*T 0eturn presentation. /*T &ayable in 'a( and 'b( computations should be the same. 2) What are the allo3a(le *nput =A#? N :8F of purchase price+ exclusive of /*T or : :: of total /*T invoice ,0 amount on< N ,ffice 9upplies Equipment N 0ental of office N *ccountant>s fees N ,ther purchases of $oods and 9ervices related to professional fees earned )ote< :( 9upplier of goods services must be /*T registered 3( 9ubstantiated with /*T ,0 invoice 5( #llustrations of /*T Computation *ssumption :< && absorbs the /*T #n CR 3883+ &rofessional !ee for 9ervices was & :+888+888 #n CR 3885+ &rofessional !ee for 9ervices is & :+888+888 Treatment< CR 3883< #ncome is & :+888+888.88 CR 3885< #ncome is :8 :: of & :+888+888 & 484+84:.88 ,utput /*T is : :: of & :+888+888 48+484.88 $ross 0eceipt from Clients &x U /*T & :+888+888.88 *ssumption 3< &ayor absorbs the /*T #n CR 3883+ &rofessional !ee for 9ervices was & :+888+888 #n CR 3885+ &rofessional !ee for 9ervices is & :+888+888+ plus :8F /*T of & :88+888 Treatment< CR 3883< #ncome is & :+888+888.88 CR 3885< #ncome & :+888+888.88 #ncome &:% x :8F ,utput tax :88+888.88 $ross 0eceipt from Clients &x U /*T &:+:88+888.888 ) 8o3 can * compute the 22G Withholdin" #a! usin" Assumptions 1 and 2? C? 2222H #ncome & :+888+888.88 38F Withholding Tax 388+888.88 )et *mount 0eceived from &ayor & 188+888.88 CR 3885< '&& absorbs the /*T( #ncome & 484+84:.88 *dd< :8F /*T 48+484.88 $ross *mount 0ec>d. from &ayor & :+888+888.88 -ess< 38F of & 484+84:.88 :1:+1:1.88 )et *mount 0eceived from &ayor & 1:1+:13.88 CR 3885< '&ayor *bsorbs the /*T( #ncome & :+888+888.88

*dd< :8F /*T :88+888.88 $ross *mount 0ec>d. from &ayor & :+:88+888.88 -ess< 38F of & :+888+888 388+888.88 )et *mount 0eceived from &ayor & 488+888.88 $) 8o3 to record the professional fee in the &ooks of Accounts of the 6rofessional 6ractitioner? Debit< Cash 488+888 Debit< Creditable W Tax 388+888 Credit< &rofessional !ees :+888+888 Credit< ,utput /*T &ayable :88+888 B( Aow to record the professional fee in the =ooks of *ccounts of the Clients &atients Debit< Expenses :+888+888 Debit< #nput /*T Credit :88+888 Credit< Cash 488+888 Credit< Withholding Tax &ayable 388+888 +) 8o3 to issue a =A# 5fficial Receipt (y the 6rofessional 6ractitioner? The invoice or official receipt of a /*T-registered && must show his name+ address+ T#)+ and professional fee+ with /*T and other particulars. -) Compliance Requirements for 66s N &ayment of & 788 annual registration fee+ and every year thereafter+ on or before January 5:. N &rinting and registration of /*T ,fficial 0eceipts N 0egistration and keeping of =ooks of *ccounts N !iling of monthly /*T declarations and quarterly /*T returns N #f applicable+ submission of the 9ummary -ist of 9ales and &urchases in softcopies 'diskettes(. &lease use the =#0 data entry module. 0egistration as a /*T Taxpayer N !ile !orm :48: '*pplication for 0egistration( and !orm :437 'T#) Capture !orm( for new taxpayers with the 0D, having "urisdiction over &&>s registered address. '=y *pril 3885+ T#) application was made available through the #nternet+ via the =#0 Website at www.bir.gov.ph.( N !or old taxpayers registered as )on-/*T+ file !orm :487 '.pdate !orm( to change registration to /*T+ or from )/-Exempt to )/-5F. N Each registrant 'for new or for change of registration( must indicate their specific profession 'i.e.+ doctor+ lawyer+ C&*+ etc.( in the appropriate registration form. 0egistration of ,fficial 0eceipts N 9ubmit #nventory of )on-/*T unused receipts 'as of December 5:+ 3883( - number of booklets and serial numbers not later than %arch :4+ 3885. N 9tamp unused receipts with C/*T-registered as of VVVVVVVVC on *-- copies+ and use only until June 58+ 3885 N !or new ,fficial 0eceipts+ secure =#0 &ermit to &rint 0egistration and Weeping of =ooks of *ccounts N Journal N -edger

N 9ubsidiary &rofessional #ncome =ook N 9ubsidiary &urchases Expenses =ook !iling and &ayment of /*T !orms to be used< N !orm 3778% '%onthly /*T Declaration( N !orm 3778P 'Puarterly /*T 0eturn( &eriod !orm:st %onth of the Puarter '!orm 3778%( Due dates38th day of the next month 3nd %onth of the Puarter '!orm 3778%( 38th day of the next month 5rd %onth+ con-solidated for the Puarter '!orm 3778P( 37th day of the next month Where to !ile and &ay the /*T &ay to the *ccredited *gent =ank '**=( within the 0evenue District ,ffice '0D,( where the && is registered. #n areas where there are no **=s+ pay to the Collection *gent in the municipality of the 0D, where registered. #f without /*T payment+ file return with the 0D,. ,ther Transitional 0equirements N 9ubmit =illings for .ncollected &rofessional fee for 9ale of 9ervices 0endered on or before December 5:+ 3883+ not later than %arch :4+ 3885. N 9ubmit #nventory of $oods 'other than Capital $oods(+ %aterials+ and 9upplies+ as of December 5:+ 3883+ not later than %arch :4+ 3885+ to claim transitional 'presumptive( input /*T. =7 =A# on Doctors 1) *f a doctor has se,eral clinics located in different districts4 should he re"ister and pay the correspondin" fee for each of the clinics? Res+ the doctor should register and pay the corresponding fee for each of the clinic located in different districts+ as each clinic is considered a separate and distinct establishment. 2) What is the ta! treatment for a doctor 3ho has no clinic (ut is affiliated 3ith se,eral hospitals? The doctor is considered a professional+ sub"ect to :8F /*T provided the gross professional fees is more than &T 778+888.88 and 5F &ercentage Tax if &T 778+888.88 and below. Ae should register his clinic but not his affiliations. 3) A doctor operates a clinic and at the same time hires )as employees) se,eral doctors as part of his staff7 For the ser,ices pro,ided to patients4 the clinic issues the official receipt of the clinic7 8o3 3ill the =A# (e char"ed 3hen the clinic later "i,es to the indi,idual doctors their professional fees? #f the hired doctors are employees receiving compensation income+ they are not sub"ect to /*T. #f+ however+ they share in the professional fees+ then there exists a professional partnership and their income fee is sub"ect to /*T. *ny amount they receive from the clinic shall be considered as inclusive of /*T. =ut the clinic is exempt from /*T as far as medical services are concerned+ but the professional fee received is sub"ect to /*T.

) Can a professional doctor claim input =A#? What are the sources of input ta!es? Res+ he can claim input /*T on his purchases that are related to the practice of profession and supported with a /*T invoice official receipts issued in his name. $) *s a doctor 3ith a ma!imum of 12 consultations a year required to ha,e his o3n receipts printed? *s this not too costly for him? Res+ the determining factor is his practice of profession and not the number of transactions in a year. 9ection 356 of the Tax Code provides that all persons sub"ect to internal revenue tax shall for each sale transfer of merchandise or for services rendered valued at &T 37.88 or more must issue a duly registered receipt or sales invoice. ') Are the fees of physical therapists4 not a <664 su(.ect to =A#? Res+ they are sub"ect to :8F /*T if their gross receipt is more than &T 778+888.88. #f their gross receipt is &T 778+888.88 or less they are sub"ect to 5F &ercentage Tax+ unless they opt to register as /*T taxpayer. /#. /*T on -awyers 1) What constitute "ross receipts of la3yers that is su(.ect to =A#? The gross receipts of lawyers may constitute of+ but not limited to the following< retainers> fees+ acceptance fees+ appearance fees+ consultation fees+ notarial fees and the like 2) *f a la3yer4 employed in the "o,ernment4 pro,idesBoperates a notarial ser,ice4 is he required to re"ister as =A# ta!payer 3ith re"ard to his notarial fees? Res+ because his notarial fees is part of his professional income and not earned under an employee-employer relationship. /##. /*T on #nsurance *gents 1) An a"ent of a life insurance company has (een re"istered as a :onE =A# #a!payer4 is it necessary for him to re"ister as =A# #a!payer? *n agent is required to register as /*T taxpayer if he is earning more than &T 778+888.88 in any twelve-month period. #f his expected income for the :3-month period is &T 778+888.88 or less+ he is sub"ect to 5F &ercentage Tax+ unless he opts to register as a /*T taxpayer. 2) *s the 6I $22722 re"istration fee a oneEtime payment only? Will it apply to the succeedin" years? The &T 788.88 is a registration fee payable annually on or before January 5: of each year. 3) What particular (ooks of accounts are necessary for ta!ation purposes? $enerally+ the books of accounts necessary for taxation purposes are Journals and -edgers. &rofessional taxpayers however+ are required to keep 9ubsidiary &rofessional

#ncome =ook and 9ubsidiary &urchases Expense =ook for their gross sales gross receipts and purchases expenses. ) Are they required to issue 5fficial Receipts? Res+ 9ection 356 of the Tax Code provides that all persons sub"ect to internal revenue tax shall for each sale transfer of merchandise or for services rendered valued at &T 37.88 or more must issue a duly registered receipt or sales invoice. #n addition+ in order to claim #nput /*T+ the name+ address and T#) of the purchaser client must be indicated in the receipt invoice. /###. ,ther &rofessional &ractitioners 1) What a(out other indi,iduals 3ho practice certain callin" (ut need not under"o "o,ernment e!am? 9aid individuals are sub"ect to /*T if their gross receipts income is more than &T 778+888.88. They are sub"ect to 5F &ercentage Tax if their gross receipts income is &T 778+888.88 or less+ unless they opt to register as /*T taxpayer. Aowever+ if their service is rendered under an employee-employer relationship+ then they are not sub"ect to /*T nor to &ercentage Tax. Examples of individuals who practice certain calling are tourist guides+ trainers+ masseurs+ brokers and other individuals who are paying occupational tax in the local or municipal government+ and there exist )o employer-employee relationship.

# "#$ registered person shall issue < ). How do determine the as main or principal business of a taxpayer who is engaged in Who arewe liable to register VAT taxpayers? mixed business activities? #ny person who, in the course of trade or business, sells, barters or exchanges goods or properties or engages in the sale or exchange of ser'ices shall be liable to register if< In determining the main or principal business of a taxpayer, we apply the predominance test. a.this@is gross sales or receipts for the past twel'e ()+) months, other than those from that are Under test, if more than fifty (50%) of its gross sales and or gross receipts comes its exempt under (ection )0* principal (#) to (U), ha'e exceeded &ne =illion 7i'e @undred business es sub!ect to "#$, its main business falls within the "#$ system ma%ing its $housand 3esos (3),500,000.00)< or status as a "#$ person. &therwise, he can not be considered as a "#$ person eligible for the election pro'ided for under (ection )0*(+) of the $ax ,ode. What is the liability of a taxpayer becoming liable to VAT and did register as next such? b. $here are reasonable grounds to belie'e that his gross sales ornot receipts for the twel'e ()+) months, other than those that are exempt under (ection )0* (#) to (U), will exceed &ne =illion 7i'e @undred $housand 3esos (3),500,000.00). #ny person who becomes liable to "#$ and fails to register as such shall be liable to pay the When is a new VAT taxpayer required to apply for registration pay tax thecredits registration output tax as if he is a "#$-registered person, but without the benefit and of input for the fee? period in which he was not properly registered. >ew "#$ taxpayers shall apply for registration as "#$ $axpayers and pay the corresponding Who may opt to register as VAT and what will be his liability? registration fee of fi'e hundred pesos (3500.00) using /I1 7orm >o. 0G05 for e'ery separate or distinct establishment or place of business before the start of their business following existing issuances on registration. ). #ny person who is "#$-exempt under (ec. ..)0*-) (/) ()) (") not re0uired to register for "#$ may, in relation to (ec. ..)0*-+, elect to be "#$-registered by registering with the 12& that has !urisdiction o'er the head office of that person, and pay the annual $hereafter, taxpayers are re0uired to pay the annual registration fee of fi'e hundred pesos registration fee of 3500.00 for e'ery separate and distinct establishment. (3500.00) not later than Kanuary 6), e'ery year. What compliance activities should a VAT taxpayer after registration as such do +. #ny person who is "#$-registered but enters into transactions which are exempt from promptly or periodically? "#$ (mixed transactions) may opt that the "#$ apply to his transactions which would $he following compliance acti'ities be )0*()) performed by $ax a "#$-registered taxpayer< ha'e been exempt undermust (ection of the ,ode, as amended 4(ec. )0*(+)5. a. 3ay the annual registration fee of 3500.00 for e'ery place of business or establishment that generates sales9 6. 7ranchise grantees of radio and or tele'ision broadcasting whose annual gross receipts b. of the preceding year do not exceed ten million pesos (3)0,000,000.00) deri'ed from 1egister the boo%s of by accounts of the business occupation calling, practice of the business co'ered the law granting the franchise may opt forincluding "#$ registration. profession, using the shall same9 $his option,before once exercised, be irre'ocable. ((ec. ))*, $ax ,ode). +. # "#$ in'oice for e'ery sale, barter or exchange of goods or properties9 and # "#$ official receipt for e'ery lease of goods or properties and for e'ery sale, barter or exchange of ser'ices.

=ay a "#$-registered person issue a single in'oice receipt in'ol'ing "#$ and >on-"#$ transactions; ?es. @e may issue a single in'oice receipt in'ol'ing "#$ and non-"#$ transactions pro'ided that the in'oice or receipt shall clearly indicate the brea%-down of the sales price between its taxable, exempt and Aero-rated components and the calculation of the "alue-#dded $ax on each portion of the sale shall be shown on the in'oice or receipt. =ay a "#$- registered person issue separate in'oices receipts in'ol'ing "#$ and >on-"#$ transactions; ?es. # "#$ registered person may issue separate in'oices receipts for the taxable, exempt, and Aero-rated component of its sales pro'ided that if the sales is exempt from 'alueadded tax, the term B"#$-CDC=3$ (#ECB shall be written or printed prominently on the in'oice or receipt and if the sale is sub!ect to Aero percent (0%) "#$, the term BFC1&1#$C2 (#ECB shall be written or printed prominently on the in'oice or receipt. @ow is the "alue-#dded $ax presented in the receipt in'oice; $he amount of the tax shall be shown as a separate item in the in'oice or receipt. (ample< (ales 3rice 3)00,000.00 "#$ )+,000.00 In'oice #mount 3))+,000.00 What is the information that must be contained in the VAT invoice or VAT official receipt? ). >ame of (eller +. 6. .. 5. G. H. I. *. /usiness (tyle of the (eller /usiness #ddress of the (eller (tatement that the seller is a "#$-registered person, followed by his $I> >ame of /uyer /usiness (tyle of /uyer #ddress of /uyer $I> of buyer, if "#$- registered and amount exceed 3),000.00 2ate of transaction

1egister thewho sales in'oices and official receipts asregistration "#$-in'oices or "#$ official receipts #ny person elects to register under optional shall not be allowed to for usehis on registration transactionsfor sub!ect to "#$. (If there are other transaction not sub!ect to cancel the next three (6) years. "#$, a separate set of non-"#$ in'oices or non-"#$ official receipts need to be registered for use on transactions not sub!ect to "#$)9 $he abo'e-stated taxpayers may apply for "#$ registration not later than ten ()0) days before the beginning of the calendar 0uarter and shall pay the registration fee unless they ha'e already d. 7iling of the =onthly "alue-added $ax 2eclaration on or before the +0th day following paid at the beginning of the year. In any case, the ,ommissioner of Internal 1e'enue may, for the end of the taxable month (for manual filers) on or before the prescribed due dates administrati'e reason deny any application for registration. &nce registered as a "#$ person, the enunciated in 11 >o. )G-+005 (for e-filers) using /I1 7orm >o. +550= and of the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day Juarterly "#$ 1eturn on or before the +5th day following the end of the taxable 0uarter of the month following registration. using /I1 7orm >o. +550J, reflecting therein gross receipts (for seller of ser'ice) gross What aresales the instances when a VAT-registered person may cancel his VAT registration? (for seller of goods) and output tax ("#$ on sales)9 purchases of goods and ser'ices made in the course of trade or business exercise of profession and input tax ("#$ on purchases), other allowable tax credits as in the case of ad'ance "#$ payment ). If he ma%es a written application and can demonstrate to the commissioner8s and "#$ withheld by go'ernment payors, and "#$ payable or excess input "#$, satisfaction that his gross sales or receipts for the following twel'e ()+) months, other whiche'er is applicable, with the accredited agent ban%s (##/s) of the /I1 or 1e'enue than those that are exempt under (ection )0* (#) to (U), will not exceed one million ,ollection &fficers (1,&s) of the /I1 (in areas without ##/), for returns with payment, fi'e hundred thousand pesos (3),500,000.00)9 or or with the 12& E$2& ha'ing !urisdiction o'er the taxpayer (home 12& E$2&), for returns without payment. ($he monthly "#$ 2eclaration and the Juarterly "#$ 1eturn shall the consolidated total for all taxable lines of not acti'ity and all the +. If he reflect has ceased to carry on his trade or the business, and does expect to recommence establishments - head within office and branches)9 any trade or business the next twel'e ()+) months. :hen will the cancellation for registration be effecti'e; e. (ubmit with the 12& E$2& ha'ing !urisdiction o'er the taxpayer, on or before the deadline setfor in registration the filing of the "#$ 1eturn, the day soft of copy the Juarterly $he cancellation will Juarterly be effecti'e from the first the of following month the (chedule of =onthly (ales and &utput $ax (if the 0uarterly sales exceed cancellation was appro'ed. 3+,500,000.00), and the soft copy of the Juarterly (chedule of =onthly 2omestic and Input $ax re0uirement the soft copy the (chedule ofperson; $ransactional Indi'idual :hat3urchases is the in'oicing receipt of of a "#$-registered Importation ( if the 0uarterly total purchases exceed 3),000,000.00), reflecting therein the re0uired data prescribed under existing re'enue issuances.

c. ..

)0. Juantity )). Unit cost )+. 2escription of the goods or properties or nature of the ser'ice )6. 3urchase price plus the "#$, pro'ided that<

$he amount of tax shall be shown as a separate item in the in'oice or receipt9 If the sale is exempt from "#$, the term B"#$-CDC=3$ (#ECB shall be written or printed prominently on the in'oice or receipt9 If the sale is sub!ect to Aero percent (0%) "#$, the term BFC1&-1#$C2 (#ECB shall be written or printed prominently on the in'oice receipt9 and If the sale in'ol'es goods, properties or ser'ices some of which are sub!ect to and some of which are Aero-rated or exempt from "#$, the in'oice or receipt shall clearly indicate the brea%down of the sales price between its taxable, exempt and Aero-rated components, and the calculation of the "#$ on each portion of the sale shall be shown on the in'oice or receipt.

b. c. d. e. f. g.

(toc%, real estate, commercial, customs and immigration bro%ers9 Eessors of property, whether personal or real9 3ersons engaged in warehousing ser'ices9 Eessors or distributors of cinematographic films9 3ersons engaged in milling, processing, manufacturing or repac%ing goods for others9 3roprietors, operators or %eepers of hotels, motels, rest houses, pension houses, inns, resorts, theatres, and mo'ie houses9 3roprietors or operators of restaurants, refreshment parlors, cafes, and other eating places, including clubs and caterers9 2ealers in securities9 Eending in'estors9 $ransportation contractors on their transport of goods or cargoes, including persons who transport goods or cargoes for hire and other domestic common carriers by land relati'e to their transport of goods or cargoes9 ,ommon carriers by air and sea relati'e to their transport of passengers, goods or cargoes from one place in the 3hilippines to another place in the 3hilippines9 (ales of electricity by generation, transmission, and or distribution companies9 7ranchise grantees of electric utilities, telephone and telegraph, radio and or tele'ision broadcasting and all other franchise grantees, except franchise grantees of radio and or tele'ision broadcasting whose annual gross receipts of the preceding year do not exceed $en =illion 3esos (3)0,000,000.00), and franchise grantees of gas and water utilities9 >on-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies9 and

h.

).. #uthority to 3rint 1eceipt >umber at the lower left corner of the in'oice or receipt. What is the liability of a taxpayer not registered as VAT and issues a VAT invoice! receipt? $he non-"#$ registered person shall, in addition to paying the percentage tax applicable to his transactions, be liable to "#$ imposed in (ection )0G or )0I of the $ax ,ode without the benefit of any input tax credit plus 50% surcharge on the "#$ payable (output tax). If the in'oice receipts contain the re0uired information, purchaser shall be allowed to recogniAe an input tax credit. What is the liability of a VAT-registered person in the issuance of a VAT invoice! receipt for VAT-exempt transactions? If a "#$-registered person issues a "#$ in'oice or "#$ official receipt for a "#$-exempt transaction but fails to display prominently on the in'oice or receipt the words B"#$-CDC=3$ (#ECB, the transaction shall become taxable and the issuer shall be liable to pay the "#$ thereon. $he purchaser shall be entitled to claim an input tax credit on his purchase. What is "output tax"? &utput tax means the "#$ due on the sale, lease or exchange of taxable goods or properties or ser'ices by any person registered or re0uired to register under (ection +6G of the $ax ,ode. What is "input tax"? Input tax means the "#$ due on or paid by a "#$-registered on importation of goods or local purchase of goods, properties or ser'ices, including lease or use of property in the course of his trade or business. It shall also include the transitional input tax determined in accordance with (ection ))) of the $ax ,ode, presumpti'e input tax and deferred input tax from pre'ious period. What comprises "goods or properties"? $he term Bgoods or propertiesB shall mean all tangible and intangible ob!ects, which are capable of pecuniary estimation and shall include, among others< a. 1eal properties held primarily for sale to customers or held for lease in the ordinary course of trade or business9 b. $he right or the pri'ilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademar%, trade brand or other li%e property or right9 $he right or pri'ilege to use in the 3hilippines of any industrial, commercial or scientific e0uipment9 $he right or the pri'ilege to use motion picture films, films, tapes and discs9 and

i. !. %.

l.

m. n.

o.

(imilar ser'ices regardless of whether or not the performance thereof calls for the exercise of use of the physical or mental faculties. $he phrase Bsale or exchange of ser'icesB shall li%ewise include< a. $he lease of use of or the right or pri'ilege to use any copyright, patent, design or model, plan, secret formula or process, goodwill, trademar%, trade brand or other li%e property or right9 $he lease or the use of, or the right to use of any industrial, commercial or scientific e0uipment9 $he supply of scientific, technical, industrial or commercial %nowledge or information9 $he supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the application or en!oyment of any such property, or right or any such %nowledge or information9 $he supply of ser'ices by a nonresident person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any brand, machinery or other apparatus purchased from such non-resident person9 $he supply of technical ad'ice, assistance or ser'ices rendered in connection with technical management or administration of any scientific, industrial or commercial

p.

b.

c.

c. d.

d.

e. 1adio, tele'ision, satellite transmission and cable tele'ision time. What comprises "sale or exchange of services"? $he term Bsale or exchange of ser'icesB means the performance of all %inds of ser'ices in the 3hilippines for others for a fee, remuneration or consideration, whether in %ind or in cash, including those performed or rendered by the following< a. ,onstruction and ser'ice contractors9

e.

f.

underta%ing, 'enture, pro!ect or scheme9 g. h. $he lease of motion picture films, films, tapes and discs9 and

$he sale of raw materials or pac%aging materials to a non-resident buyer for deli'ery to oriented enterprise to be used in manufacturing, processing, pac%ing or repac%ing in th buyer8s goods, paid for in acceptable foreign currency, and accounted for in accordance regulations of the /(39

$he lease or the use of or the right to use radio, tele'ision, satellite transmission and cable tele'ision time. What is a #ero-rated sale? It is a sale, barter or exchange of goods, properties and or ser'ices sub!ect to 0% "#$ pursuant to (ections )0G (#) (+) and )0I (/) of the $ax ,ode. It is a taxable transaction for "#$ purposes, but shall not result in any output tax. @owe'er, the input tax on purchases of goods, properties or ser'ices, related to such Aero-rated sales, shall be a'ailable as tax credit or refund in accordance with 11 >o. )G-+005. What transactions are considered as #ero-rated sales? $he following ser'ices performed in the 3hilippines by "#$-registered person shall be sub!ect to Aero percent (0%) rate< a. 3rocessing, manufacturing or repac%ing goods for other persons doing business outside the 3hilippines which goods are subse0uently exported where the ser'ices are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the /ang%o (entral ng 3ilipinas (/(3)9 b. (er'ices other than processing, manufacturing or repac%ing rendered to a person engaged in business conducted outside the 3hilippines or to a non-resident person engaged in business who is outside the 3hilippines when the ser'ices are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the /ang%o (entral ng 3ilipinas (/(3)9 (er'ices rendered to persons or entities whose exemption under special laws or international agreements to which the 3hilippines is a signatory effecti'ely sub!ects the supply of such ser'ices to Aero percent (0%) rate9 (er'ices rendered to persons engaged in international shipping or air transport operations, including leases of property for use thereof9 3ro'ided, howe'er, that the ser'ices referred to herein shall not pertain to those made to common carriers by air and sea relati'e to their transport of passengers, goods or cargoes from one place in the 3hilippines to another place in the 3hilippines, the same being sub!ect to twel'e percent ()+%) "#$ under (ec. )0I of the $ax ,ode starting 7eb. ), +00G9 (er'ices performed by subcontractors and or contractors in processing, con'erting, or manufacturing goods for an enterprise whose export sales exceeds se'enty percent (H0%) of total annual production9 $ransport of passengers and cargo by domestic air or sea carriers from the 3hilippines to a foreign country. Lross receipts of international air carriers doing business in the 3hilippines and international sea carriers doing business in the 3hilippines are still liable to a percentage tax of three percent (6%) based on their gross receipts as pro'ided for in (ec. ))I of the $ax ,ode but shall not be liable to "#$9 and (ale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other shipping sources using technologies such as fuel cells and hydrogen fuels9 3ro'ided, howe'er that Aero-rating shall apply strictly to the sale of power or fuel generated through renewable sources of energy, and shall not extend to the sale of ser'ices related to the maintenance or operation of plants generating said power .

o o o o

$he sale of raw materials or pac%aging materials to an export-oriented enterprise whos se'enty percent (H0%) of total annual production9 (ale of gold to the /(39 $ransactions considered export sales under Cxecuti'e &rder >o. ++G, otherwise %nown In'estments ,ode of )*IH, and other special laws9 and

c.

d.

e.

f.

$he sale of goods, supplies, e0uipment and fuel to persons engaged in international shi transport operations9 3ro'ided, that the same is limited to goods, supplies, e0uipment attributable to the transport of goods and passengers from a port in the 3hilippines dire 'ice-'ersa without doc%ing or stopping at any other port in the 3hilippines unless the d other 3hilippine port is for the purpose of unloading passengers and or cargoes that ori load passengers and or cargoes bound for abroad9 3ro'ided, further, that if any portion supplies is used for purposes other than the mentioned in this paragraph, such portion shall be sub!ect to twel'e percent ()+%) output "#$. b. 7oreign ,urrency 2enominated (ales $he sale to a non-resident of goods, except those mentioned in (ections ).* and )50 of the $ax ,ode, asse the 3hilippines for deli'ery to a resident in the 3hilippines, paid for in acceptable foreign currency and accou the rules and regulations of the /(3. c. (ales to 3ersons or Cntities 2eemed $ax-exempt under (pecial Eaw or International #greement (ale of goods or property to persons or entities who are tax-exempt under special laws or international agre 3hilippines is a signatory, such as, #sian 2e'elopment /an% (#2/), International 1ice 1esearch Institute (I1 Where will taxpayers file their applications for VAT #ero-rating? $axpayers shall file their application directly with the #udit Information, $ax Cxemption and Incenti'es 2i'is #ssessment (er'ice, or with the E$#I2 I and II, /I1 >ational &ffice, as the case may be. What is a $ontractor%s &inal 'ayment (elease $ertificate and where should taxpayers file their ap $he ,ontractor8s 7inal 3ayment 1elease ,ertificate is issued by the /I1 before a go'ernment contractor is fu with the go'ernment. $axpayers may file their application at the /I1 >ational &ffice at the #udit Informatio Incenti'es 2i'ision (#I$CI2) What transactions are considered deemed sales? $he following transactions are considered as deemed sales< a. $ransfer, use or consumption, not in the course of business, of goods or properties originally inte the course of business. $ransfer of goods or properties not in the course of business can ta%e plac person withdraws goods from his business for his personal use9 b. 2istribution or transfer to<

o o
c.

(hareholders or in'estors as share in the profits of the "#$-registered person9 or ,reditors in payment of debt or obligation

g.

,onsignment of goods if actual sale is not made within sixty (G0) days following the date such go ,onsigned goods returned by the consignee within the G0-day period are not deemed sold9

$he following sales by "#$-registered persons shall be sub!ect to Aero percent (0%) rate< a. Cxport sales

1etirement from or cessation of business, with respect to all goods on hand, whether capital good or materials as of the date of such retirement or cessation, whether or not the business is continu successor. $he following circumstances shall, among others, gi'e rise to transactions Bdeemed sa $he sale and actual shipment of goods from the 3hilippines to a foreign country, irrespecti'e of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership ofo the goods soof ownership of the business. $here is a change in the ownership of the busines ,hange exported, paid in acceptable foreign currency or its e0ui'alent in goods or ser'ices, and accounted for in proprietorship incorporated9 or the proprietor of a single proprietorship sells his entire b accordance with the rules and regulations of the /ang%o (entral ng 3ilipinas (/(3)9

d.

2issolution of a partnership and creation of a new partnership which ta%es o'er the business.

business9

What is VAT-exempt sale? +. (ale of real properties utiliAed for low-cost housing as defined by 1# >o. H+H*, otherwi It is a sale of goods, properties or ser'ice and the use or lease of properties which is not sub!ect to output tax and whereby the buyer 2e'elopment and @ousing #ct of )**+B and other related laws, such as 1# >o. HI65 an is not allowed any tax credit or input tax related to such exempt sale. What are the VAT-exempt transactions? 6. (ale of real properties utiliAed for specialiAed housing as defined under 1# >o. H+H*, an a. (ale or importation of agricultural and marine food products in their original state, li'estoc% and poultry of a %ind generally as 1# >o. HI65 and 1# >o. IHG6, wherein price ceiling per unit is 3++5,000.00 or as m used as, or yielding or producing foods for human consumption9 and breeding stoc% and genetic materials therefore9 determined by the @U2,, and the >C2# and other related laws9 b. (ale or importation of fertiliAers9 seeds, seedlings and fingerlings9 fish, prawn, li'estoc% and poultry feeds, including .. ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds horses, fighting coc%s, a0uarium fish, Aoo animals and other animals considered as pets)9

c.

(ale of residential lot 'alued at &ne =illion 7i'e @undred $housand 3esos (3),500,000. for race and lot and other residential dwellings 'alued at $wo =illion 7i'e @undred $housand 3e below where the instrument of sale transfer disposition was executed on or after Kuly later than Kanuary 6), +00* and e'ery three (6) years thereafter, the amounts stated h Importation of personal and household effects belonging to residents of the 3hilippines returning from abroad and nonits present 'alue using the ,onsumer 3rice Index, as published by the >ational (tatistic resident citiAens coming to resettle in the 3hilippines9 3ro'ided, that such goods are exempt from custom duties under the that such ad!ustment shall be published through re'enue regulations to be issu further, $ariff and ,ustoms ,ode of the 3hilippines9 of each year.

d.

Importation of professional instruments and implements, wearing apparel, domestic animals, and personal household effects units with a monthly rental per unit not exceeding $en $housand 3esos (3)0, 0. Eease of residential (except any 'ehicle, 'essel, aircraft, machinery and other goods for use in the manufacture and merchandise of any in amount of%ind aggregate rentals recei'ed by the lessor during the year9 3ro'ided, that not later than commercial 0uantity) belonging to persons coming to settle in the 3hilippines, for their own use and not fore'ery sale, three barter(6) or years thereafter, the amount of 3)0,000.00 shall be ad!usted to its present 'alue exchange, accompanying such persons, or arri'ing within ninety (*0) days before or after their arri'al, upon the production Index, as published by the >(&9 of e'idence satisfactory to the ,ommissioner of Internal 1e'enue, that such persons are actually coming to settle in the 3hilippines and that the change of residence is bonafide9 r. (ale, importation, printing or publication of boo%s and any newspaper, magaAine, re'iew or bullet (er'ices sub!ect to percentage tax under $itle " of the ,ode, as amended9

e. f.

inter'als with fixed prices for subscription and sale and which is not de'oted principally to the pub ad'ertisements9

g. h.

(er'ices by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar cane importation into raw s. (ale, or lease of passenger or cargo 'essels and aircraft, including engine e0uipment sugar9 domestic or international transport operations9 3ro'ided, that the exemption from "#$ on the imp of passenger and or cargo 'essels shall be limited to those of one hundred fifty ()50) tons and ab spare parts of said 'essels9 3ro'ided, further, that the 'essels to be imported shall comply with th =edical, dental, hospital and 'eterinary ser'ices except those rendered by professionals9 the time of ac0uisition counted from the date of the 'essel8s original commissioning, as follows< ( cargo 'essel, the age limit is fifteen ()5) years old, (b) for tan%ers, the age limit is ten ()0) year Cducational ser'ices rendered by pri'ate educational institutions duly accredited by the 2epartment of Cducation (2epC2), passengers crafts, the age limit is fi'e (5) years old9 3ro'ided, finally, that exemption shall be sub the ,ommission on @igher Cducation (,@C2) and the $echnical Cducation and (%ills 2e'elopment #uthority ($C(2#) and (ection . of 1epublic #ct >o. *+*5, otherwise %nown as B$he 2omestic (hipping 2e'elopment #c those rendered by the go'ernment educational institutions9 (er'ices rendered by indi'iduals pursuant to an employer-employee relationship9 t.

i. !.

%.

l.

m.

n.

o. p.

Importation of life-sa'ing e0uipment, safety and rescue e0uipment and communication and na'ig steel plates and other metal plates including marine-grade aluminum plates, used for shipping tra 3ro'ided, the exemption shall be sub!ect to the pro'isions of (ection . of 1epublic #ct >o. *+ (er'ices rendered by regional or area head0uarters established in the 3hilippines by multinational corporations whichthat act as B$he 2omestic (hipping 2e'elopment #ct of +00.B. super'isory, communications and coordinating centers for their affiliates, subsidiaries or branches in the #sia-3acific 1egion and do not earn or deri'e income from the 3hilippines9 u. Importation of capital e0uipment, machinery, spare parts, life-sa'ing and na'igational e0uipment metal plateslaws including marine-grade aluminum plates to be used in the construction, repair, reno' $ransactions which are exempt under international agreements to which the 3hilippines is a signatory or under special except those granted under 3.2. >o. 5+* - 3etroleum Cxploration ,oncessionaires under the 3etroleum #ct merchant of )*.*9 marine 'essel operated or to be operated in the domestic trade. 3ro'ided, that the exe the pro'isions of (ection )* of 1epublic #ct >o. *+*5, otherwise %nown as the B$he 2omestic (hi +00.B. (ales by agricultural cooperati'es duly registered and in good standing with the ,ooperati'e 2e'elopment #uthority (,2#) to their members, as well as of their produce, whether in its original state or processed form, to non-members, their '. directly Importation of fuel, goods and supplies engaged in international shipping or air transport operatio importation of direct farm inputs, machineries and e0uipment, including spare parts thereof, to be used and fuel, goods and supplies shall be used exclusi'ely or shall pertain to the transport of goods and o exclusi'ely in the production and or processing of their produce9 the 3hilippines directly to a foreign port, or 'ice-'ersa, without doc%ing or stopping at any other p the doc%ing or stopping at any other 3hilippine port is for the purpose of unloading passengers an Lross receipts from lending acti'ities by credit or multi-purpose cooperati'es duly registered and in good standing with the originated form abroad, or to load passengers and or cargoes bound for abroad9 3ro'ided, furthe ,ooperati'e 2e'elopment #uthority9 fuel, goods or supplies is used for purposes other that the mentioned in the paragraph, such port supplies shall be sub!ect to )+% "#$9 (ales by non-agricultural, non-electric and non-credit cooperati'es duly registered with and in good standing with ,2#9 3ro'ided, that the share capital contribution of each member does not exceed 7ifteen $housand 3esos (3)5,000.00) and w. (er'ices of ban%s, non-ban% financial intermediaries performing 0uasi-ban%ing functions, and oth regardless of the aggregate capital and net surplus ratably distributed among the members9 intermediaries, such as money changers and pawnshops, sub!ect to percentage tax under (ection of the $ax ,ode9 and Cxport sales by persons who are not "#$-registered9 $he following sales of real properties are exempt from "#$, namely< ). x.

(ale or lease of goods or properties or the performance of ser'ices other than the transactions m paragraphs, the gross annual sales and or receipts do not exceed the amount of &ne =illion 7i'e (3),500,000.00). 3ro'ided, that not later than Kanuary 6), +00* and e'ery three (6) years therea (ale of real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or 3),500,000.00 shall be ad!usted to its present 'alue after using the ,onsumer 3rice Index, as pu

What are the previously exempt transactions that are now sub)ect to VAT?

-- calendar 0uarter or fiscal 0uarter. :hat are the penalties for failure to submit the (ummary Eists;

=edical ser'ices such as dental M 'eterinary ser'ices rendered by professionals9 Eegal ser'ices9 >on-food agricultural products9 =arine and forest products9 ,otton and cotton seeds9 III. :hat is the treatment for :ithholding of "#$ on Lo'ernment =oney 3ayments; ,oal and natural gas9 3etroleum products9 3assenger cargo 'essels of more than 5,000 tons9 :or% of art, literary wor%s, musical composition9 Leneration, transmission and distribution of electricity including that of electric cooperati'es9 (ale of residential lot 'alued at more than 3),500,000.009 (ale of residential house M lot dwellings 'alued at more than 3+,500,000.009

7or failure to file, %eep or supply a statement, list or information re0uired on the date prescribed shall pay and administrati'e penalty of &ne $housand 3esos (3),000.00) for each such failure, unless it is shown that such failure is due to reasonable cause and not to willful neglect9 and #n aggregate amount to be imposed for all such failures during a taxable year shall not exceed $wenty-7i'e $housand 3esos (3+5,000.00).

$he go'erment or any of its political subdi'isions, instrumentalities or agencies, including go'ernment-owned or controlled corporations (L&,,s) shall, before ma%ing payment on account of each purchase of goods and or ser'ices taxed at twel'e percent ()+%) "#$ pursuant to (ections )0G and )0I of the $ax ,ode, deduct and withhold a 7inal "#$ due at the rate of fi'e percent (5%) of the gross payment.

$he fi'e percent (5%) final "#$ withholding rate shall represent the net "#$ payable of the seller. $he remaining se'en percent (H%) effecti'ely accounts for the standard input "#$ for sales of goods or ser'ices to go'ernment or any of its political subdi'isions, instrumentalities or agencies including L&,,s in lieu of the actual input "#$ directly attributable or ratably apportioned to such sales. (hould actual input "#$ attributable to sales to go'ernment exceeds se'en percent (H%) of gross payments, the excess may form part of the sellers8 expense or cost. &n the other hand, if actual input "#$ attributable to sale to go'ernment is less than se'en percent (H%) of gross payment, the difference must be closed to expense or cost.

Eease of residential unit with a monthly rental of more than 3)0,0009

II. 1CEIC7-1elated Jueries

$he go'ernment or any of its political subdi'isions, instrumentalities or agencies including L&,,s, as well as pri'ate corporation, indi'iduals, estates and trusts, whether large or non-large taxpayers, shall withhold twel'e percent ()+%) "#$ with respect to the following payments< ). Eease or use of properties or property rights owned by non-residents9 and

What is "(*+,*&"? +. &ther 1CEIC7 means 1econciliation of Eisting for Cnforcement. It supports the third party information program of the /ureau through the ser'ices rendered in the 3hilippines by non-residents. cross referencing of third party information from the taxpayers8 (ummary Eists of (ales and 3urchases prescribed to be submitted on a 0uarterly basis. I". In what grounds can the ,ommissioner of Internal 1e'enue suspend the business Who are required to submit -ummary +ist of -ales? operations of a taxpayer; "#$ taxpayers with 0uarterly total sales receipts (net of "#$), exceeding $wo =illion 7i'e @undred $housand 3esos (3+,500,000.00) are re0uired to submit a (ummary Eist of (ales. $he ,ommissioner or his authoriAed representati'e is empowered to suspend the business Who are required to submit -ummary +ist of 'urchases? operations and temporarily close the business establishment of any person for any of "#$ taxpayers with 0uarterly total purchases (net of "#$) of goods and ser'ices, including importation exceeding &ne =illion 3esos the following 'iolations< (3),000,000.00) are re0uired to submit (ummary Eist of 3urchases. What are the -ummary +ists required to be submitted? (a) In the case of a "#$-registered 3erson< Juarterly (ummary Eist of (ales to 1egular /uyers ,ustomers ,asual /uyers ,ustomers and &utput $ax

Juarterly (ummary of Eist of Eocal 3urchases and Input tax9 and

7ailure to issue receipts or in'oices9 7ailure to file a 'alue-added-tax return as re0uired under (ection )).9 or Understatement of taxable sales or receipts by thirty percent (60%) or more of his correct taxable sales or receipts for the taxable 0uarter.

Juarterly (ummary Eist of Importation.

:hen is the deadline for submission of the abo'e (ummary Eists; $he (ummary Eist of (ales 3urchases, whiche'er is applicable, shall be submitted on or before the twney-fifth (+5th) day of the month following the close of the taxable 0uarter

(b) 7ailure to any 3erson to 1egister as 1e0uired under (ection +6G

$he temporary closure of the establishment shall be for the duration of not less than fi'e (5) days and shall be lifted only upon compliance with whate'er re0uirements prescribed by the ,ommissioner in the closure order.

D/9CR*6#*5: &ercentage tax is a business tax imposed on persons or entities who sell or lease goods+ properties or services in the course of trade or business whose gross annual sales or receipts do not exceed & 778+888 and are not /*T-registered. W85 AR/ R/Q>*R/D #5 F*;/ 6/RC/:#A</ #A@ R/#>R:9 *ny person who is not a /*T-registered person 'persons exempt from /*T under 9ec. :84? of the Tax Code( -Domestic carriers and keepers of garages+ except owners of bancas and owners of animal drawn two- wheeled vehicle -,perators of international carriers doing business in the &hilippines -!ranchise grantees of electric+ gas or water utilities -!ranchise grantees of radio and or television broadcasting companies whose gross annual receipts for the preceding year do not exceed Ten %illion &esos '& :8+888+888.88( and did not opt to register as /*T taxpayers -,perators of communication equipment sending overseas dispatch+ messages+ or conversations from the &hilippines+ except on services involving the following< N $overnment of the &hilippines - for messages transmitted by the $overnment of the 0epublic of the &hilippines or any of its political subdivisions and instrumentalities N Diplomatic services - for messages transmitted by any embassy and consular offices of a foreign government N #nternational organi?ations - for messages transmitted by a public international organi?ation or any of its agencies based in the &hilippines en"oying privileges and immunities pursuant to an international agreement N )ews 9ervices - for messages from any newspaper+ press association+ radio or television newspaper broadcasting agency+ or newsticker services to any other newspaper+ press association+ radio or television newspaper broadcasting agency or newsticker services or to bonafide correspondents+ which messages deal exclusively with the collection of news items for+ or the dissemination of news items through public press+ radio or television broadcasting or a newsticker service furnishing a general news service similar to that of the public press

-=anks and non-bank financial intermediaries and finance companies --ife insurance companies -*gents of foreign insurance companies -&roprietor+ lessee+ or operator of cockpits+ cabarets+ night or day clubs+ boxing exhibitions+ professional basketball games+ "ai-alai and race tracks -Every stock broker who effected a sale+ barter+ exchange or other disposition of shares of stock listed and traded through the -ocal 9tock Exchange '-9E( other than the sale by a dealer in securities -* corporate issuer stock broker+ whether domestic of foreign+ engaged in the sale+ barter+ exchange or other disposition through #nitial &ublic ,ffering '#&,( seller in secondary public offering of shares of stock in closely held corporations