Where are VAT returns
filed?

The Monthly VAT Declaration (BIR Form 2550M) and Quarterly VAT Return (BIR Form 2550Q) shall be filed with any Authorized Agent Bank (AAB) in the place where the taxpayer is registered or required to be registered.

In cases of no-payment, the return shall be filed with the Revenue District Office (RDO)/LTDO and LTAD where the taxpayer is registered or required to be registered.

In places where there are no AABs, it shall be filed with and the tax paid to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer of the place where the RDO is located.

What is "output 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.

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What is "input tax?

Input tax means the VAT paid by a VAT-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 VAT-registered person. It shall also include the transitional input tax determined in accordance with Section 111 of the Tax Code

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

• Real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business
• 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
• The right or the privilege to use in the Philippines any industrial, commercial or scientific equipment
• The right or the privilege to use motion picture film, films, tapes and discs
• 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, including those performed or rendered by the following:

• Construction and service contractors
• Stock, real estate, commercial, customs and immigration brokers
• Lessors of property, whether personal or real
• Warehousing services
• Lessors or distributors of cinematographic films
• Persons engaged in milling, processing, manufacturing or repacking goods for others
• Proprietors, operators or keepers of hotels, motels, resthouses, pension houses, inns, resorts
• Proprietors or operators of restaurants, refreshment parlors, cafes and other eating places, including clubs and caterers
• Dealers in securities
• Lending investors
• 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
• Services of franchise grantees of telephone and telegraph, radio and television broadcasting and all other franchise grantees except those under Section 119 of the Tax Code
• Services of non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies
• Similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties

The phrase "sale or exchange of services" shall include:

• 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
• The lease or the use of, or the right to use of any industrial, commercial or scientific equipment
• The supply of scientific, technical, industrial or commercial knowledge or information
• 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
• 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
• 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
• The lease of motion picture films, films, tapes and discs
• The lease or the use of or the right to use radio, television, satellite transmission and cable television time

What is a zero-rated sale?

It is a sale, barter or exchange of goods, properties and/or services subject to 0% VAT pursuant to Sections 106 (A) (2) and 108 (B) of the Tax Code.

What transactions are considered as zero-rated sales?

The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate:

• Processing, manufacturing or repacking goods for other persons doing business outside the Philippines 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 Bangko Sentral ng Pilipinas (BSP)
• Services 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 Bangko Sentral ng Pilipinas (BSP)
• Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate
• Services rendered to vessels engaged exclusively in international shipping
• Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceeds seventy percent (70%) of total annual production
  
  The following sales by VAT-registered persons shall be subject to zero percent (0%) rate
  :
• Sale of goods which are directly shipped by a VAT-registered resident to a place outside the Philippines
• Sale of goods which are considered as "deemed" export sales by a VAT-registered person to certain entities who are also residents of the Philippines:
• ales to export-oriented enterprises which the Code considers as export sales at the level of the supplier of raw materials
  • Sales of gold to the Bangko Sentral ng Pilipinas
  • Sales considered as exportation of goods under a special law such as Executive Order No. 226 (Omnibus Investments Code of 1987) and Republic Act No. 7916 (PEZA Law)
• Foreign currency denominated sales of goods
• Sales to entities, the exemption of which, under a special law or an international agreement with the Government of the Philippines, effectively zero rates such sale

Where will taxpayers file their applications for VAT zero-rating?

Taxpayers may file their application with the Audit Information, Tax Exemption and Incentives Division (AITEID) at the BIR National Office.

What is a Contractor's Final Payment Release Certificate and where should taxpayers file their application for this?

The Contractor's Final Payment Release Certificate is issued by the BIR before a government contractor is fully paid for his contract with the government. Taxpayers may file their application at the BIR National Office at the Audit Information, Tax Exemption and Incentives Division (AITEID)

The following transactions are considered as deemed sales:

• 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
• Distribution or transfer to:
  - Shareholders or investors as share in the profits of the VAT-registered person; or
  - Creditors in payment of debt
• Consignment of goods if actual sale is not made within sixty (60) days following the date such goods were consigned
• Retirement from or cessation of business, with respect to inventories of taxable goods existing as of such retirement or cessation