VATupdate

VAT Rates in Philippines

Quick overview

Standard Rate Reduced Rate Other Rates
12% N/A 0%

The local name for VAT in Philippines is Value-Added Tax

There is basically 1 VAT rates in Philippines, a standard VAT rate of 12%

Recent developments

For more information about (recent) rate change developments in Philippines, please click HERE.

Standard rate: 12%

This rate applies for all transactions that take place in Philippines, unless an exception applies (such as a reduced rate, the zero rate or an exemption, or a reason to treat the transaction as outside scope of VAT).

Zero rate (0%)

Examples of goods and services taxable at 0%, with the right to deduct VAT

  • Export sales, including e.g. Sales of goods exported from the Philippines to a foreign country, Sales of raw materials or packaging materials to a nonresident buyer for delivery to a resident exporter for manufacturing, processing, packing or repacking the buyer’s goods in the Philippines.
  • Sale of goods, supplies, equipment and fuel to persons engaged in international shipping or international air transport operations
  • Processing, manufacturing or repacking goods for other persons doing business outside the Philippines that are subsequently exported
  • Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed 70% of total annual production.
  • Services engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed
  • Transport of passengers and cargo
  • Sale of power or fuel generated through renewable sources of energy
  • Services rendered to persons engaged in international shipping or air transport operations
  • Services of contractors or subcontractors in processing or manufacturing goods for exporters with export sales exceeding 70% of annual production
  • Local sales of goods, properties and services by a VAT-registered person to a person or entity that was granted indirect tax exemption

Examples of exempt supplies of goods and services

  • The sale or import of the following items:
    — Agricultural or marine food products in their original state
    — Livestock or poultry for human consumption
    — Fertilizers, seeds, fingerlings, fish, prawn, livestock, or poultry feeds and ingredients used for manufacturing finished feeds for non-human consumption
    — Drugs and medicines prescribed for diabetes, high cholesterol and hypertension from1 January 2020
    — Drugs and medicines for cancer, mental illness, tuberculosis and kidney diseases from 1 January 2023
  • Import of Personal or household effects of residents returning from abroad or nonresident citizens coming to resettle in the Philippines
    Services rendered by agricultural contract growers and milling for others of palay (unhusked rice) into rice, corn into grits and sugar cane into raw sugar
  • Domestic common carriers by land
  • Garage keepers
  • International air or shipping carriers
  • Radio or television broadcast franchisees with annual gross receipts of PHP10 million or less
  • Gas and water utilities’ franchisees
  • Persons, companies and corporations (not cooperatives or associations) engaged in providing life insurance in the Philippines
  • Fire, marine or other insurance agents of foreign insurance companies
  • Proprietors or lessees or operators of cockpits, clubs, boxing, professional basketball, jai-alai and race tracks
  • Providers for overseas dispatches, messages or conversations from the Philippines
  • Sales or exchanges of shares listed and traded at the local exchange or by initial public offering
  • Medical, dental, hospital and veterinary services, except those rendered by professionals
  • Educational services of government or accredited private educational institutions
  • Services rendered by regional or area headquarters established in the Philippines by multinational corporations that act as supervisory, communications and coordinating center for their affiliates, subsidiaries or branches in the Asia-Pacific region and do not earn or derive income from the Philippines
  • Sales by agricultural cooperatives to members, sales of their produce to nonmembers and the import of direct farm inputs, equipment or spare parts for producing or processing farm produce
  • Sales by nonagricultural or nonelectric or noncredit cooperatives if a member’s capital contribution cap is PHP15,000
  • Sales of real properties
  • Lease of residential units for rent not exceeding PHP15,000 a month
  • The sale, import, printing or publication of books and newspapers or magazines appearing at regular intervals that have fixed sale prices and that are not devoted principally to publication of paid advertisements
  • Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations
  • Importation of fuel, goods and supplies by persons engaged in international shipping or air transport operations.
  • Services of banks, nonbank financial intermediaries performing quasi-banking functions, and other nonbank financial intermediaries, such as money changers and pawnshops
  • Sale of goods or services to “senior citizens,”
  • Sale of goods or services to persons with disability

A global VAT/GST rate overview can be found here (note this is a work in progress).

This post was last updated on October 9, 2021.

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