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Sale or Exchange of Services performance of all kind of services in the Philippines

for a fee For remuneration or consideration
in kind in cash
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Service VAT Situs

Inside Philippines - subject to VAT Outside Philippines - not subject to VAT
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Requirements of Service Transaction Subject to VAT

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Service must be performed in the Philippines Rendered for valuable consideration Not exempt from VAT under the Tax Code

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Tax Base on Services

GROSS RECEIPTS - amount of money collected - amount charged for materials - deposits - advance payments
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actually or constructively collected

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Professional/ Technical Services

Transfer of Technology

Lease or Use of Intangible Property

Lease or Use of Tangible Property

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Professional/ Technical Services

Subject to VAT:
VAT- registered person Non-VAT registered but gross receipts exceed P1,19,500 per year

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Subject also to withholding tax :

10% (P720,000 and below per year) 15% (P720,000 above per year)
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1. SERVICE CONTRACTOR
In general:
12% VAT

Services entered with the government: 12% VAT 5% final withholding VAT 2% creditable withholding income tax on sale of services
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2. SECURITY AGENCY FEES

agency fee (12% VAT) Contract price security guards salary
Note:
If not segregated, the whole contract price is subject to 12% VAT
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3. REAL STATE BROKER

Commission income (12% VAT)
If VAT- registered person Commission earnings exceed P1,919,500 per year

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4. DEALERS IN SECURITIES
Gross Receipts (12% VAT)
Formula: Gross selling price- cost of securities sold

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5. LENDING INVESTORS
Note:
Pawnshops are not classified as lending investors

Persons other than banks Non-bank financial intermediaries Finance companies Other intermediaries not performing quasibanking functions.

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6. TRANSPORTATION SERVICES
Goods and Cargos
land, air, water (12% VAT)

Passengers
air, sea land additional charges
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(12% VAT) (3% OPT) (12% VAT)

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7. FREIGHT FORWARDERS cross boarder movement

(Phil. to Foreign or vice versa)

SERVICES
local movement
(within Philippines)
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7. FREIGHT FORWARDERS

Basis of VAT
Outbound Movements
Local origin charges Actual commission income of the forwarders

Inbound Movements

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Local distribution charges Currency adjustment factor Actual commission income of the forwarders

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8. TRAVEL AGENCIES

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9. HOTELS, RESTURANTS, and CATERERS

Gross Receipts:
INCLUDE: (Add)
Charges for rooms Laundry Valet services Food and beverages Corkage Handling charges for providing telephone Telex Cable Fax services Compensation Lease to concessions Cake shop sales

EXCLUDE: (Deduct)
Service charges to waiters and employees Actual cost of long distance and overseas telephone calls Local taxes

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10. MEDIA ADVERTISING

Taxable Bases:

Gross receipt representing commission (advertising company)

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Gross receipt derived by the media (the media itself)

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11. NON-LIFE INSURANCE

Taxable Bases:
Acquired from domestic or Foreign Companies

AUTHORIZED NOT AUTHORIZED

(12% based on PREMIUM)

Through an authorized agent (10% of PREMIUM COLLECTED) Direct purchased (5% of PREMIUM PAID)

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12. SERVICES OF NON-RESIDENT PERSONS

Subject to WITHHOLDING VAT and INCOME TAX
withheld by the payor (VAT/ non-VAT taxpayer) Specifications: Rental fees of aircraft, machineries, and other equipment (7.5% final withholding tax)
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VAT on rental

(based on contract price agreed)

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13. LEASE OF COMMERCIAL AND RESIDENTIAL UNITS

In general:
Exceptions:

(12% VAT)
non-VAT taxpayer gross receipts not exceed P1,919,500

Specifications:
Monthly rental < P12,800/unit/month Monthly rental > P12,800/unit/month aggregate annual rental < P1,919,500 Monthly rental > P12,800/unit/month aggregate annual rental > P1,919,500 (VAT and OPT exempt) (VAT exempt; 3% OPT) (12% VAT)

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14. WITHHOLDING TAX ON LEASE OF COMMERCIAL PROPERTIES

Gross Receipts (Rent Income)
Subject to 12% VAT
Subject to 5% creditable withholding income tax

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15. BOOKS, MAGAZINES, and NEWSPAPERS

Specifications:
appear at regular intervals with fixed prices not devotes principally to advertisements

VAT Exempt

bindery services to another company not in accordance with the above specifications

12% VAT

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16. AGRICULTURAL CONTRACT GROWERS AND MILLERS OF AGRICULTURAL PRODUCTS

Agricultural Contract Growers Millers

VAT Exempt

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17. MEDICAL SERVICES In general

medical services
dental services hospital services Veterinary services

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VAT Exempt

Exemptions:
rendered by health maintenance organizations rendered by professional engaged in practice sale of drugs not included in hospital bill Powered by:

12% VAT

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18. EDUCATIONAL SERVICES

Educational institutions accredited by DECS, CHED, and TESDA (VAT exempt) Taxable Base: (12% Vat on Gross Revenue)

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19. WORKS OF ART, LITERARY WORKS, AND MUSICAL COMPOSITIONS

Gross Receipts (12% VAT)

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20. EMPLOYEES SERVICES

VAT- Exempt
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21. FRANCHISE GRANTEES

Telecommunications
ABROAD
not subject to VAT

WITHIN THE PHILIPPINES

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subject to VAT
not subject to VAT subject to VAT not subject to VAT

Deposits for telephone instruments Forfeited deposits Overseas conversation

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ZERO- RATED OF EFFECTIVELY ZERORATED SERVICES

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Granted indirect tax exemptions Services performed outside the Philippines Allowed to deduct INPUT VAT but not OUTPUT VAT

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ZERO- RATED OF EFFECTIVELY ZERORATED SERVICES

Organizations: PEZA or SBMA- Registered Enterprises International organizations- granted direct or indirect taxes exemptions Other organizations Asian Devt Bank Intl Rice Research Institute US Agency for Intl Development US Navy Supply Depot World Health Organization Intl Labor Organization
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ZERO- RATED OF EFFECTIVELY ZERORATED SERVICES

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Zero-rated services by Domestic Corporations Services paid in foreign currency Services to entities under exemption Services to international shipping or international air transport operations Services to subcontractors whose export sales exceed 70% of total annual production Transport of passengers and cargo by air or sea from Phil. to Foreign (vice versa) Powered by:
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