Meaning of Output Tax and Input Tax

Output tax means the VAT due on the sale, lease or exchange of taxable goods or properties or services by any person registered or required to register under Section 236 of the Tax Code.

Input tax means the VAT due on or paid by a VAT-registered on importation of goods or local purchase of goods, properties or services, 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 Section 111 of the Tax Code, presumptive input tax and deferred input tax from previous period.

What comprises "GOODS OR PROPERTIES"?

The term "goods or properties" shall mean all tangible and intangible objects, which are capable of pecuniary estimation and shall include, among others:

a.     Real 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 privilege to use in the Philippines of any industrial, commercial or scientific equipment;

d.     The right or the privilege to use motion picture films, films, tapes and discs; and

e.     Radio, television, satellite transmission and cable television time.

What comprises "SALE OR EXCHANGE OF SERVICES"?

The term "sale or exchange of services" means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, whether in kind or in cash, including those performed or rendered by the following:

a.     Construction and service contractors;

b.     Stock, real estate, commercial, customs and immigration brokers;

c.     Lessors of property, whether personal or real;

d.     Persons engaged in warehousing services;

e.     Lessors or distributors of cinematographic films;

f.      Persons engaged in milling, processing, manufacturing or repacking goods for others;

g.     Proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts, theatres, and movie houses;

h.     Proprietors or operators of restaurants, refreshment parlors, cafes, and other eating places, including clubs and caterers;

i.      Dealers in securities;

j.      Lending 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 relative to their transport of goods or cargoes;

l.      Common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines;

m.   Sales of electricity by generation, transmission, and/or distribution companies;

n.     Franchise grantees of electric utilities, telephone and telegraph, radio and/or television broadcasting and all other franchise grantees, except franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do not exceed Ten Million Pesos (P10,000,000.00), and franchise grantees of gas and water utilities;

o.     Non-life insurance companies (except their crop insurances), including marine, fire and casualty insurance, surety, fidelity, indemnity and bonding companies, and mutual benefit associations including nonresident foreign persons rendering non0life insurance services in the Philippines; and

p.     Similar services regardless of whether or not the performance thereof calls for the exercise of use of the physical or mental faculties.

The phrase "SALE OR EXCHANGE OF SERVICES" shall likewise include:

a.     The lease of 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 enjoyment 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, project or scheme;

g.     The lease of motion picture films, films, tapes and discs; and