VAT Rules for Freebies and Promotional Items in the Philippines: Key Concepts and Legal Framework

• VAT in the Philippines applies to sales, exchanges, and certain transfers of goods, including those without conventional consideration (“deemed sales”).
• Freebies and promotional items may be subject to VAT depending on whether they are part of a composite sale or fall under deemed sale rules.
• Discounts can reduce the VAT base if they are unconditional, stated on the invoice, and granted at the time of sale; conditional discounts are handled through adjustments.
• Input VAT is creditable if related to VATable or zero-rated sales, but not for exempt sales.
• The VAT treatment of freebies depends on their nature (e.g., part of a sale, promotional expense, or transfer without consideration).

Source: respicio.ph

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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