Value-Added Tax (VAT) Registration

1. MANDATORY REGISTRATION

1.     Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases goods or properties and renders services subject to VAT, if the aggregate amount of actual gross sales or receipts exceed P1,919,500 for the past 12 months (other than those that are exempt)   OR there are reasons to believe that the gross sales or receipts for the next 12 months will exceed P1,919,500.

2.     Radio and/or television broadcasting companies whose annual gross receipts of the preceding year exceeds P10,000,000.

3.     A person required to register as VAT taxpayer but failed to register.

Penalty for non-registration of those required to register as VAT?

He shall be liable to pay the tax as if he were a VAT-registered person but he cannot avail the benefits of input tax credit for the period he was not properly registered.

2. OPTIONAL REGISTRATION

Any person who is VAT-exempt or not required to register for VAT may, in relation to Sec. 4.109-2, elect to be VAT-registered by registering with the RDO that has jurisdiction over the head office of that person, and pay the annual registration fee of P500.00 for every separate and distinct establishment.  Any person who elects to register under optional registration shall not be allowed to cancel his registration for the next three (3) years.

Any person who is VAT-registered but enters into transactions which are exempt from VAT (mixed transactions) may opt that the VAT apply to his transactions which would have been exempt under Section 109(1) of the Tax Code, as amended [Sec. 109(2)].

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) derived from the business covered by the law granting the franchise may opt for VAT registration. This option, once exercised, shall be irrevocable. (Sec. 119, Tax Code).

The above-stated taxpayers may apply for VAT registration not later than ten (10) days before the beginning of the calendar quarter and shall pay the registration fee unless they have already paid at the beginning of the year. In any case, the Commissioner of Internal Revenue may, for administrative reason deny any application for registration. Once registered as a VAT person, the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day of the month following registration.

3. CANCELLATION OF VAT REGISTRATION

Instances when a VAT-registered person may cancel his VAT registration:

1.     If he makes a written application and can demonstrate to the commissioner's satisfaction that his gross sales or receipts for the following twelve (12) months, other than those that are exempt under Section 109 (A) to (U), will not exceed P1,919,500.00); or

2.     If he has ceased to carry on his trade or business, and does not expect to recommence any trade or business within the next twelve (12) months.

·         The cancellation for registration will be effective from the first day of the following month the cancellation was approved.