Subject to the provisions of subsection (2) hereof, the
following transactions shall be exempt
from the value-added tax:
1.
"Sale or importation of:
Ø agricultural
and marine food products in their
original state,
Ø livestock
and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock
and genetic materials therefor.
"Products
classified under this paragraph (such as meat, fruits and vegetables) shall be
considered in their original state even if they have undergone the simple
processes of preparation or preservation for the market, such as freezing,
drying, salting, broiling, roasting, smoking or stripping. Polished and/or
husked rice, corn grits, raw cane sugar and molasses, ordinary salt, and copra
shall be considered in their original state;
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Examples of Agricultural & Marine Food
Products @ their original state
|
|
Agricultural
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Marine
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Livestock
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Poultry
|
|
Polished/husked rice
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Fish
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Cows
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Fowls
|
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Corn grits
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Crustaceans such as:
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Bulls
|
Ducks
|
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Raw cane
sugar & molasses
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Eels
Trout
Lobster
Shrimps
Prawns
Oysters
Mussels
Clams
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Calves
|
Geese
|
|
Ordinary salt
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Pigs
|
Turkey
|
|
Copra
|
Sheep
Goats
Rabbits
|
|
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NOTE:
§ Livestock
or poultry does not include fighting cocks, race horses, zoo animals and
other animals generally considered as pets
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2.
"Sale or importation of fertilizers; seeds, seedlings and
fingerlings; 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, zoo animals and other
animals generally considered as pets).
Ø Note:
Importation of raw materials are taxable. i.e.; importation of diatomaceous earth which
is used for the formulation fertilizers are subject to VAT.
3.
"Importation of personal and household effects belonging to the residents of
the Philippines returning from abroad and nonresident citizens coming to
resettle in the Philippines: Provided, That such goods are exempt from customs
duties under the Tariff and Customs Code of the Philippines;
4.
"Importation 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 Philippines, for their own use and
not for sale, barter or exchange, accompanying such persons, or arriving within
ninety (90) days before or after their arrival, upon the production of evidence
satisfactory to the Commissioner, that such persons are actually coming to
settle in the Philippines and that the change of residence is bona fide;
5.
"Services subject to percentage tax under
Title V;
6.
"Services by agricultural contract
growers and milling for others of palay into rice, corn into grits and sugar
cane into raw sugar;
Ø Agricultural contract growers refer to those
persons producing for others’ poultry, livestock or other agricultural and
marine food products in their original state.
Ø i.e.; a contract for a package of services of
receiving eggs from breeder farm, sorting, fumigating, setting, hatching,
sexing of day-old broilers, sorting and delivering them to other contract
grower.
7.
"Medical, dental, hospital and veterinary
services except those rendered by
professionals;
Ø Laboratory services are exempted. If the hospital or clinic operates a pharmacy
or drugstore, the sale of drugs and
medicines are subject to VAT.
Ø Hospital bills constitute medical
services. The sales made by the
drugstore to the in-patients which
are included in the hospital bills
are part of medical bills (not subject to vat).
Ø The sale of the drug store to the out-patients are taxable because they
are NOT PART of medical services of the hospital.
Professional Practitioners
Professional Practitioners (PPs) are
formerly classified as non-VAT taxpayers and were exempt from the Value-Added
Tax and Percentage taxes under Section 109 of the National Internal Revenue
Code (hereinafter referred to as the Code), until December 31, 2002. Prior to
this date, they were subject only to Income Tax under Section 24 of the
Code. Effective January 1, 2003, however, by virtue of Republic Act Nos.
7716 and 9010, which were implemented by Revenue Regulation Nos. 1-2003 and
3-2003, services of PPs are also subject to either VAT or 3% Percentage
Tax.
Pursuant
to Revenue Regulations No. 16-2005, services of Professional Practitioners are subject to VAT
if gross professional fees exceed
P1,919,500 for a 12-month period and subject to 3% Percentage Tax if gross
professional fees total P1,919,500 and below for a 12-month period.
"Professional
Practitioners" include the following:
·
Certified
Public Accountants
·
Insurance
Agents (Life & Non-life)
·
Other
Professional Practitioners required to pass the government examination
·
Others
8.
"Educational services rendered by private
educational institutions, duly accredited by the Department of Education
(DEPED), the Commission on Higher Education (CHED), the Technical Education And
Skills Development Authority (TESDA) and those rendered by government educational
institutions;
9.
"Services rendered by individuals
pursuant to an employer-employee relationship;
10.
"Services rendered by regional or area
headquarters established in the Philippines by multinational corporations which
act as supervisory, communications and coordinating centers for their
affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn
or derive income from the Philippines;
11.
"Transactions which are exempt under
international agreements to which the Philippines is a signatory or under
special laws, except those under Presidential Decree No. 529 (Petroleum
Exploration Concessionaires under the petroleum act of 1949.
12.
"Sales by agricultural
cooperatives duly registered with the Cooperative Development Authority to their members as well as sale of their produce, whether in its original state
or processed form, to non-members; 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 produce.
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Agricultural
Cooperative
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Sale to Members
|
Sale to Non-Members
|
|
Sale of
cooperative’s own produce
|
Exempt
|
Exempt
|
|
Other than the
cooperative’s own produce (i.e., from Traders)
|
Exempt
|
Subject
to Vat
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13.
"Gross receipts from lending activities
by credit or multi-purpose cooperatives duly registered with the Cooperative
Development Authority;
Ø
Exemption
is not only limited to the gross receipts on loans extended to its members but
also to other persons who are not members.
14.
"Sales by non-agricultural, non-electric
and non-credit cooperatives duly
registered with the Cooperative Development Authority: Provided, That the share
capital contribution of each member does not exceed Fifteen thousand pesos
(P15,000) and regardless of the aggregate capital and net surplus ratably
distributed among the members;
Ø Importation by non-agricultural, non-electric
and noncredit cooperatives of machineries and equipment including spare parts
thereof, to be used by them are subject to vat.
15.
"Export sales by persons who are not VAT-registered;
16.
"Sale
of real properties
Ø not primarily held for sale to customers or
held for lease in the ordinary course of trade or business,
·
Only sale
of real properties held primarily for sale to customers or held for lease in
the ordinary course of trade or business of the seller shall be subject to vat.
Ø Residential lot valued
at P1,919,500
& below (formerly P1.5M). If
two or more adjacent residential lots are sold or disposed in favor of one
buyer, for the purpose of utilizing the lots as one residential lot, the sale
shall be exempt from vat only if the aggregate value of the lots do not exceed
P1,919,500. Adjacent residential lots,
although covered by separate titles and/or separate tax declarations, when sold
to one and the same buyer, whether covered by one separate Deed of Conveyance,
shall be presumed as sale of one residential lot. (RR 16-2011)
Ø House & Lot, and Other Residential Dwellings valued at P3,199,200 and below.
Ø real
property utilized for low-cost housing
(ceiling price per unit does not
exceed P2,000,000) and socialized housing (ceiling
price per unit does not exceed P300,000)
as defined by Republic Act No. 7279, otherwise known as the Urban Development
and Housing Act of 1992, and other related laws,
Provided, that every three (3) years thereafter, the
amounts herein stated shall be adjusted to their present values using the
Consumer Price Index, as published by the National Statistics Office (NSO);
17.
"LEASE
of a RESIDENTIAL UNIT
with a monthly rental not exceeding
Ten thousand pesos (P12,800) regardless of the amount of aggregated rentals
received by the lessor during the year. Provided,
That not later than January 31, 2009 and every three (3) years thereafter, the
amount herein stated shall be adjusted to its present value using the Consumer
Price Index as published by the National Statistics Office (NSO); (RR 16-2011).
Ø LEASE of RESIDENTIAL
UNITS where the monthly rental
per unit exceeds P12,800 but the
aggregate of such rentals of the lessor during the year do not exceed P1,919,500 shall likewise be exempt
from VAT, however, the same shall be subjected to the 3% percentage tax.
Ø In cases
where a lessor has SEVERAL RESIDENTIAL UNITS for LEASE, some are leased
out for a monthly rental per unit of not
exceeding P12,800 while others are leased out for more than P12,800 per unit, his tax liability will be:
v The gross
receipts from rentals not exceeding P12,800 per month per unit shall be exempt from vat regardless of the
aggregate annual gross receipts.
v The gross
receipts from rentals exceeding P12,800 per month per unit shall be subject to
vat if the annual gross receipts (from
said units only – not including the gross receipts from units leased out for
not more than P12,800) exceed P1,919,500.
RESIDENTIAL UNIT shall refer
to:
ü Apartments
and houses and lots used for residential purposes;
ü Buildings
or parts or units thereof used solely as dwelling places (i.e., dormitories,
rooms, bed spaces) except
motels, motel rooms, hotels and hotel rooms.
UNIT shall
refer to:
ü Apartment
unit in case of apartments
ü House in
case of residential houses
ü Per person
in case of dormitories, boarding houses and bed spaces; and
ü Per room in
case of rooms for rent
18.
"Sale, importation, printing or
publication of books and any newspaper,
magazine, 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 advertisements;
19.
"Sale, importation or lease of passenger
or cargo vessels and aircraft, including engine, equipment and spare parts
thereof for domestic or international transport operations;
Provided, that the exemption from vat on the
importation and local purchase of passenger and/or cargo vessels shall be
limited to those of 150 tons and above, including engine and spareparts of
said vessel; and the vessel to be imported shall comply with the age limit
requirement as follows:
Ø Passenger and/or cargo – 15 years old
Ø Tankers – 10 years old
Ø High speed passenger crafts – 5 years old
Provided, finally,
that the exemption shall be subject to the provisions of Sec. 4 of RA 9295,
otherwise known as “The Domestic Shipping Development Act of 2004”
Sale
of vessels with age of more than 15 years is subject to vat
20.
"Importation of fuel, goods and supplies
by persons engaged in international shipping or air transport operations;
Provided
that the:
Ø Fuel, goods and supplies shall be exclusively
or shall pertain to the transport of goods and/or passenger from a port in the
Philippines directly to a foreign port without stopping at any other port in
the Philippines.
Ø Fuel, goods or supplies is used for the
purposes other than that mentioned in the preceding paragraph, such portion of
fuel, goods and supplies shall be subject to 12% vat.
21.
Importation of life-saving equipment, safety
and rescue equipment and communication and navigation safety equipment, steel
plates and other metal plates including marine-grade aluminum plates used for
shipping transport operations; Provided, that the exemption shall be subject to
the provisions of Sec. 19 of RA 9295, otherwise known as “The Domestic Shipping
Development Act of 2004” (RR 4-2007).
22.
Importation of capital equipment, machinery
and spare parts, life-saving and navigational safety equipment, steel plates
and other metal plates including marine-grade aluminum plates used in the
construction, repair, renovation or alteration of any merchant marine vessel
operated or to be operated in the domestic trade. Provided, that the exemption shall be subject
to the provisions of Sec. 19 of RA 9295, otherwise known as “The Domestic
Shipping Development Act of 2004” (RR
4-2007).
23.
"Services of banks, non-bank financial
intermediaries performing quasi-banking functions, and other non-bank financial
intermediaries (i.e.; money changers
and pawnshops); and
24.
"Sale 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 do not exceed the
amount of P1,919,500; Provided, That not later than January 31, 2009 and every
three (3) years thereafter, the amount herein stated shall be adjusted to its
present value using the Consumer Price Index as published by the National
Statistics Office (NSO);
25.
Vat on
Purchase of SPECIFIED Goods and Services by a Senior Citizen.
