A.

Power and authority of the Commissioner

Section 5 (B)
Power of the Commissioner to obtain
information, and to summon, examine and governments, government agencies and availed by cooperatives to the BIR and DOF.
take testimony of persons
Section 6
Power of the Commissioner to make determine fair market value of real properties.
assessments and prescribe additional
requirements for tax administration and
enforcement.
NIRC TRAIN LAW
Provides for the authority of the Commissioner Additional provision: The Cooperative Development
to obtain information from national and local Authority shall submit a report on tax incentives
instrumentalities
This information shall be included in the Tax
Incentives Management and Transparency Act
(TIMTA) database.
The Commissioner has the authority to In exercising this authority, the following shall be
observed:
1. Mandatory consultation with both private and
public competent appraisers before division of the
Philippines into zones.
2. Prior notice to affected taxpayers before the
determination of fair market values of the real
properties.
3. Publication or posting of adjustments in zonal
value in a newspaper of general circulation in the
province, city or municipality concerned.
4. The basis of valuation and records of consultation
shall be public records open to the inquiry of any
taxpayer. 5. Zonal valuations shall be automatically
adjusted once every three years.

B. Personal Income Tax

NIRC TRAIN LAW
Section 24 Taxable income of individuals are subject to the The amendment provides for revised personal income
Income tax rates on Individual following graduated rates: tax brackets for 2018-2022:
Citizen and Individual Resident
Alien of the Philippines
 TAX SCHEDULE EFFECTIVE JANUARY 1, 2018 TO
TAX SCHEDULE
DECEMBER 31, 2022
Not over ₱10,000 5% Not over ₱250,000 0%
Over ₱10,000 but not ₱500 + 10% of the excess
over ₱30,000 over ₱10,000
Over ₱30,000 but not ₱2,500 + 15% of the
over ₱70,000 excess over ₱30,000
Over ₱70,000 but not ₱8,500 + 20% of the
over ₱140,000 excess over ₱70,000
Over ₱140,000 but not ₱22,500 + 25% of the
over ₱250,000 excess over ₱140,000
Section 24 Taxable income is subject to the same graduated The amendment provides for revised personal income
Income tax rates on Individual rates. tax brackets for 2018-2022:
Citizen and Individual Resident TAX SCHEDULE EFFECTIVE JANUARY 1, 2018 TO
TAX SCHEDULE
Alien of the Philippines DECEMBER 31, 2022
Over ₱250,000 but not ₱50,000 + 30% of the Over ₱250,000 but not 20% of the excess over
over ₱500,000 excess over ₱250,000 over ₱400,000 ₱250,000
Over ₱500,000 ₱125,000 + 32% of the Over ₱400,000 but not ₱30,000 + 25% of the excess
excess over ₱500,000 over ₱800,000 over ₱400,000
Over ₱800,000 but not ₱ 130,000 + 30% of the
over ₱2M excess over ₱800,000
Over ₱2M but not over ₱490,000 + 32% of the
₱8M excess over ₱2M
Over ₱8M ₱2,410,000 + 35% of the
excess over ₱8M
Section 24 For 2023 onwards:
Income tax rates on Individual
Citizen and Individual Resident TAX SCHEDULE EFFECTIVE
Alien of the Philippines JANUARY 1, 2023 onwards
Not over ₱250,000 0%
Over ₱250,000 but not 15% of the excess over
over ₱400,000 ₱250,000
 Over ₱400,000 but not ₱22,500 + 20% of the excess
over ₱800,000 over ₱400,000
Over ₱800,000 but not ₱102,500 + 25% of the
over ₱2,000,000 excess over ₱800,000

Over ₱2M but not over ₱402,500 + 30% of the

₱8M excess over ₱2M
Over ₱8M ₱2,202,500 + 35% of the
excess over ₱8M
Note that the BIR issued through Revenue
Memorandum Circular No. 1- 2018 the revised
withholding tax on compensation table.
Section 24 Taxable income is subject to the same graduated For Purely Self-employed and/or Professionals whose
Income tax of self-employed and/or rates. gross sales/receipts and other non-operating income do
professionals not exceed the VAT threshold of ₱3M, the tax shall be,
at the taxpayer’s option, either:
1. 8% income tax on gross sales or gross receipts in
excess of ₱250,000 in lieu of the graduated income tax
rates and the percentage tax; OR
2. Income tax based on the graduated income tax rates
for individuals.
Section 24 Taxable income is subject to the same graduated For mixed income earners (earning both compensation
Income tax of mixed income rates. income and income from business or practice of
earners profession, their income taxes shall be:
1. For income from compensation – Graduated income
tax rates for individuals, AND SL - 13 CONFIDENTIAL
NIRC Section 24 Income tax of mixed income earners
NIRC Provision TRAIN Taxable income is subject to the
same graduated rates. Personal Income Tax
2. For income from business or practice of profession:
a. Gross sales/receipts which do not exceed the VAT
threshold of ₱3M — 8% income tax on gross
sales/receipts and other non-operating income OR
 graduated income tax rates on taxable income, at the
taxpayer’s option
b. Gross sales/receipts and other non-operating income
which exceeds the VAT threshold of ₱3M — graduated
income tax rates for individuals.
Section 24 (B)(1) Philippine Charity Sweepstakes and Lotto winnings is Philippine Charity Sweepstakes and Lotto winnings in
Final tax on winnings exempt from the 20% final tax. excess of ₱10,000 shall be subject to the 20% final tax.
Section 24 (B)(1) Final tax on Interest income received by an individual taxpayer The rate of final tax on interest income received by
interest on foreign currency deposit(except a non-resident individual) from a depository resident individual taxpayer under the expanded foreign
bank under the expanded foreign currency deposit currency deposit system increased from 7.5% to 15%
(EFCD) system is subject to 7.5% final tax. final tax.
Section 24 (C) The capital gains tax on net capital gains realized The final tax rate for net capital gains tax on the sale,
Capital gains tax on sale of shares from sale, barter, or exchange or other disposition of barter, exchange or other disposition of shares of stock
not traded through the stock shares of stock in a domestic corporation not traded in a domestic corporation not traded through the stock
exchange through the stock exchange is: exchange is increased from the 5/10% CGT to a flat rate
of 15% CGT.
Not over ₱100,000 – 5%
On any amount in excess of ₱100,000 – 10%
Section 25 (C), (D), (E) Alien individuals and qualified Filipino employees Additional provision [Subsection (F)]:
Preferential tax rate for individuals employed by: The 15% preferential tax rate provided in Subsections
employed by RHQ, ROHQ, OBU and 1. Regional or area and Regional Operating (C), (D), and (E) shall not be applicable to RHQs, ROHQs,
Petroleum Contractors and headquarters of multinational companies (RHQs and OBUs or Petroleum service contractor and subcontractor
subcontractors ROHQs) [Subsection (C)] registering with the SEC after January 1, 2018.
2. Offshore banking units (OBUs) [Subsection (D)]
3. Petroleum Service contractor and subcontractor
But existing RHQs, ROHQs, OBUs or Petroleum service
[Subsection (E)] contractor and subcontractor shall continuously be
entitled to avail of the preferential tax treatment for
are subject to a preferential tax of 15% final their present and future qualified employees.
withholding tax on gross compensation income
Section 25 (C), (D), (E) Presidential Veto: The President vetoed this line item
Preferential tax rate for individuals under Subsection (F):
employed by RHQ, ROHQ, OBU and “But existing RHQs, ROHQs, OBUs or Petroleum service
Petroleum Contractors and contractor and subcontractor shall continuously be
subcontractors entitled to avail of the preferential tax treatment for
their present and future qualified employees.” for being
violative of equal protection.

The President stated in his letter that “given the

Section 31
Definition of Taxable Income
Section 35
Personal Exemptions
Section 32 (B)
Tax exempt 13th month pay
Section 33 (A)
Tax on fringe benefits given to non-
rank and file employees
Section 34 (M)
Allowable deduction for premium
payments on health and/or
hospitalization insurance
Section 51
Filing of individual income tax
return
significant reduction in the personal income tax, the
employees of these firms should follow the regular tax
rates applicable to other individual taxpayers.”
Means the pertinent items of gross income specified The phrase “and/or personal and additional
in this Code, less the deductions and/or personal and exemptions” is removed in the definition.
additional exemptions, if any, authorized for such
types of income by this Code or other special laws
Individual taxpayers are entitled to: Basic Personal The Basic Personal and Additional Exemptions of
Exemption — ₱50,000 and Additional Exemption — individual taxpayers are removed. The related provision
₱25,000 per qualified dependent child. on furnishing of exemption certificate is likewise
removed.
The amount of tax-exempt 13th month pay and other The amount of tax-exempt 13th month pay and other
benefits is ₱82,000. benefits is increased to ₱90,000.
• Fringe benefits given to non-rank and file • The Fringe Benefits Tax is increased to 35% effective
employees are subject to 32% final tax. January 1, 2018.
• The grossed up monetary value of the fringe • The grossed up monetary value of the fringe benefit
benefit given to non-rank and file employees shall be given to non-rank and file employees shall be
determined by dividing the actual monetary value by determined by dividing the actual monetary value by
68%. 65%.
The allowable deduction for premium payments on Allowable deduction for premium payments on health
health and/or hospitalization insurance of an and/or hospitalization insurance of an individual
individual taxpayer is ₱2400 per year or ₱200 per taxpayer is removed.
month, subject to a gross family income threshold of
₱250,000.
An individual whose gross income does not exceed Individual taxpayers whose taxable income is subject to
his total personal and additional exemptions for zero percent under the new graduated tax table (i.e.,
dependents are not required to file income tax return does not exceed ₱250,000) shall not be required to file
(ITR). an income tax return.

Section 51-A
Substituted Filing of Income tax
returns by employees receiving
purely compensation income from
only one employer in the
Philippines
Section 56 (A)(2)
Installment Payment of tax due for
individuals and corporations
Section 62
Exemption for estates and trusts
Section 74
Declaration of Income tax for
individuals
Additional provision:
The ITR shall consist of a maximum of four (4) pages in
paper OR electronic form. It shall only contain the
following information:
• Personal profile and information
• Gross sales receipts or income from compensation,
from business, or from exercise of profession (except
income subject to final tax) • Allowable deductions
• Taxable income
• Income tax due and payable
No provision. Substituted filing of ITRs is available for:
• Individual taxpayers
• Receiving purely compensation income, regardless of
amount • From only one employer in the Philippines for
the calendar year • The income tax of which has been
correctly withheld by the employer (i.e. tax due = tax
withheld) The Certificate of Withholding filed by the
employers duly stamped “received” by the BIR shall be
the substituted filing by such employers.
When tax due exceeds ₱2,000, the taxpayer (other The new deadline of payment of second installment is
than a corporation) may elect to pay the tax in two October 15 following the close of the calendar year.
equal installments. Payment of installments: • First
installment — time of filing of return • Second
installment — on or before July 15 following the close
of the calendar year.
There is an allowed personal exemption of ₱50,000 The exemption for estates and trusts is removed.
from the income of the estate or trust.
Every individual subject to income tax shall make and The deadline for filing of declaration estimated income
file a declaration of his estimated income for the for the current taxable year is on or before May 15 of
current taxable year on or before April 15 of the the same taxable year. The payment of the four
same taxable year. The amount of estimated income installments shall be:
with respect to which a declaration is required shall • First – May 15
be paid in four (4) installments: • Second – August 15
 • First – at time of declaration
• Second – August 15
• Third – November 15
• Fourth – on or before April 15 of the following
calendar year when the final adjusted income tax
return is due to be filed.
C. Personal and Corporate Income Tax
Section 34 (L) Individual taxpayers (except non-resident
Optional Standard Deduction alien) and corporations may elect a standard
deduction not exceeding 40% of gross
sales/receipts or of gross income, as the
case may be, in lieu of itemized allowable
deductions.
Section 57 The rate of withholding tax on items of
Withholding of creditable tax at source income payable by payor-
corporations/persons shall be not less than
one percent (1%) but not more than thirty-
two percent (32%). The tax withheld shall be
credited against the income tax liability of
the taxpayer.
D. Corporate Income Tax
Section 27 (C) PCSO is not anymore exempt from payment
Exemption Government-owned or -Controlled of corporate income tax.
Corporations, Agencies or Instrumentalities
Section 27 (D)(1) Interest income received by a domestic
Final Tax on interest on foreign currency corporation from a depository bank under
deposit the expanded foreign currency deposit
(EFCD) system is subject to 7.5% final tax.
Section 27 (D)(2) The capital gains tax on net capital gains
Capital gains tax on sale of shares not traded realized from sale, barter, or exchange or
• Third – November 15
• Fourth – on or before May 15 of the following calendar
year when the final adjusted income tax return is due to
be filed.
For GPPs and the partners comprising them, OSD may
be availed only once, i.e., either by the GPP itself or by
the partners comprising the GPP.
Beginning January 1, 2019, the rate of withholding tax
shall be not less than one percent (1%) but not more
than fifteen percent (15%). Revenue Memorandum
Circular No. 1-2018 provides that the applicable EWT
rate on income payments to self-employed
individuals/ professionals is 8%.
PCSO is not anymore exempt from payment of
corporate income tax.
The rate of final tax on interest income received by
domestic corporation under the expanded foreign
currency deposit system increased from 7.5% to 15%
final tax.
The final tax rate for net capital gains tax on the sale,
barter, exchange or other disposition of shares of
through the stock exchange
Section 52
Filing of corporate income tax return
other disposition of shares of stock in a
domestic corporation not traded through
the stock exchange is: Not over ₱100,000 –
5% On any amount in excess of ₱100,000 –
10%
Every corporation subject to tax, except
foreign corporations not engaged in trade or
business in the Philippines, shall render in
duplicate, a true and accurate
• quarterly income tax return; AND
• Final or adjustment return.
stock in a domestic corporation not traded through
the stock exchange is increased from the 5/10% CGT
to a flat rate of 15% CGT.
Additional provision:
The ITR shall consist of a maximum of four (4) pages in
paper OR electronic form.
It shall also only contain the information as required in
ITRs of individual taxpayers.
These requirements shall not affect the
implementation of TIMTA.

E. Final Withholding Tax and Expanded Withholding Tax Returns

Section 58 FWT and EWT returns shall be filed and the payment
Return and payments of taxes withheld at made not later than the last day of the month
source following the close of the quarter during which the
withholding was made. The provision that the
Commissioner may require the payment of the taxes
withheld at more frequent intervals is removed.

F. Estate Tax
Section 84 The estate tax rate is based on a graduated schedule. The estate tax rate is fixed at 6% based on the value of
Rates of estate tax the net estate.
NET ESTATE TAX
Not over ₱200,000 Exempt
Over ₱200,000 but not 5% of the excess over
over ₱500,000 ₱200,000
Over ₱500,000 but not ₱15,000 + 8% of the
over ₱2M excess over ₱500,000
Over ₱2M but not over ₱135,000 + 11% of the
₱5M excess over ₱2M
 Over ₱5M but not over ₱465,000 + 15% of the
₱10M excess over ₱5M
Over ₱10M ₱1,215,000 + 20% of the
excess over ₱10M
Section 86 (A) The value of the net estate of a resident or citizen is
Allowable deductions from the determined by deducting the following from the
gross estate of a citizen or resident gross estate:
1. Standard deduction of ₱1,000,000;
2. Expenses, losses, indebtedness, and taxes
a. Funeral expenses
b. Judicial expenses
c. Claims against the estate
d. Claims against insolvent persons
e. Unpaid mortgages
Section 86 (A) 5. Property previously taxed;
Allowable deductions from the 6. Transfers for public use;
gross estate of a citizen or resident 7. Family home in the amount of ₱1,000,000;
8. Medical expenses, not exceeding ₱500,000
9. Amount received by heirs under RA No. 4917
(Retirement benefits of private firm employees)
Section 86 (B) The value of the net estate of a non-resident is
Allowable deductions from the determined by deducting the following from the
gross estate of a non-resident gross estate:
1. Expenses, losses, indebtedness, and taxes in
proportion to the value of the entire gross estate
situated in the Philippines;
2. Property previously taxed;
3. Transfers for public use
Section 86 (D) No deduction shall be allowed in the case of a Miscellaneous provision is deleted.
Miscellaneous provision for nonresident not a citizen of the Philippines, unless
nonresidents the executor, administrator, or anyone of the heirs,
as the case may be, includes in the return required to
The following are the allowable deductions from the
gross estate of a resident or citizen:
1. Standard deduction of ₱5,000,000;
2. Claims against the estate;
3. Claims against insolvent persons;
4. Unpaid mortgage or indebtedness on property;
5. Property previously taxed;
6. Transfers for public use;
7. Family home, in the increased amount of
₱10,000,000;
8. Amounts received by heirs under RA No. 4917
(Retirement benefits of private firm employees)
For Non-residents:
1. Standard deduction in the amount of ₱500,000
2. Value of
• Claims against the estate
• Claims against insolvent person • Unpaid mortgages In
proportion to the value of the entire gross estate
situated in the Philippines
3. Property previously taxed
4. Transfer for public use
 be filed under Section 90 the value at the time of his
death of that part of the gross estate of the
nonresident not situated in the Philippines.
Section 89 Notice of decedent’s death shall be filed by the
Notice of death executor, administrator, or any of the legal heirs
within two months after death or after qualifying as
such executor or administrator: • In all cases of
transfers subject to tax • In cases where though
exempt from tax, the gross value of the estate
exceeds ₱20,000.
Section 90 Estate tax returns showing a gross value exceeding
Attachment to Estate Tax Return - ₱2,000,000 shall be supported with a statement duly
CPA certification certified by a CPA.
Section 90 (B) Estate tax returns shall be filed within six (6) months
Time of filing of estate tax return from the decedent’s death.
Section 91 (C) No provision
Payment by installment of estate
tax [new]
Section 97 If a bank has knowledge of the death of a person,
Payment of tax antecedent to the who maintained a bank deposit account alone, or
transfer of shares, bonds, or rights jointly with another, it shall not allow any withdrawal
from the said deposit account unless the
Commissioner has certified that the taxes imposed
thereon have been paid.
G. Donor’s Tax
Section 99 The donor’s tax for each calendar year shall be
Rates of tax computed on the basis of the total net gifts made
during the calendar year in accordance with the
graduated tax table.
Requirement for filing of notice of death is removed
The threshold amount for the requirement of attaching
a statement duly certified by a CPA is increased to
₱5,000,000 (from ₱2,000,000).
The filing of estate tax returns shall be within one (1)
year from the decedent’s death.
In case the available cash of the estate is insufficient to
pay the total estate tax due, payment by installment
shall be allowed within two (2) years from the statutory
date of payment, without civil penalty and interest.
If a bank has knowledge of the death of a person, who
maintained a bank deposit account alone, or jointly with
another, it shall allow any withdrawal from the said
deposit account, subject to a final withholding tax of
(6%).
The donor’s tax is fixed at 6% based on annual
total gifts exceeding ₱250,000 (exempt gift),
regardless of whether the donee is a stranger or
not.
 NET GIFT TAX NET GIFT TAX
Not over ₱100,000 Exempt Not over ₱100,000 Exempt
Over ₱100,000 but 2% of the excess Over ₱100,000 but not 2% of the excess over
not over ₱200,000 over ₱100,000 over ₱200,000 ₱100,000
Over ₱200,000 but ₱2,000 + 4% of the Over ₱200,000 but not ₱500,000 ₱2,000 + 4%
not over ₱500,000 excess over over of the excess over
₱200,000 ₱200,000
Over ₱500,000 but ₱14,000 + 6% of Over ₱500,000 but not ₱14,000 + 6% of the
not over ₱1M the excess over over ₱1M excess over ₱500,000
₱500,000
Section 99 The donor’s tax shall be 30% of the net gifts when The donor’s tax is fixed at 6% based on annual
Rates of tax the donee or beneficiary is a stranger. total gifts exceeding ₱250,000 (exempt gift),
regardless of whether the donee is a stranger or
not.
Section 100 Transfer The amount by which Additional proviso: Even if the sale, exchange, or
for less than the fair market value of other transfer of property is for an insufficient
adequate the property transferred consideration, the same will still be considered
consideration exceeded the value of made for adequate and full consideration
the consideration provided that such transfer is made in the ordinary
received for such course of business, i.e.: • a bona fide transaction;
transfer, shall for • at arm’s length; and • free from donative intent.
purpose of donor’s tax,
be deemed a gift, and
included in computing
the amount of gifts
made during the year.
Section 101 Dowries or gifts made The exemption of dowries (gifts made on account
Exemption of certain on account of marriage of marriage) is removed.
gifts by parents to each of
their legitimate,
recognized, natural, or
adopted children to the
extent of the first
 ₱10,000 shall be exempt
from donor’s tax.
H. Value-Added Tax
Section 106 (A)(2) The following are
Zero-rated sale of entitled to VAT zero-
goods or properties rating:
1. The sale and actual
shipment of goods from
the Philippines to a
foreign country,
irrespective of any
shipping arrangement,
and paid for in
acceptable foreign
currency or its
equivalent in goods or
services, and accounted
for in accordance with
the rules of the BSP;
Section 106 (A)(2) 2. Sale of raw materials
Zero-rated sale of or packaging materials
goods or properties to a nonresident buyer
for delivery to a resident
local export-oriented
enterprise to be used in
manufacturing,
processing, packaging or
repackaging and paid for
in acceptable foreign
The following sales by VATregistered persons shall
be subject to zero percent 0% rate:
1. The sale and actual shipment of goods from the
Philippines to a foreign country, irrespective of
any shipping arrangement, and paid for in
acceptable foreign currency or its equivalent in
goods or services, and accounted for in
accordance with the rules of the BSP; SL - 55
CONFIDENTIAL NIRC Section 106 (A)(2) Zero-rated
sale of goods or properties NIRC Provision TRAIN
Value-Added Tax
2. Sale and delivery of goods to: • Registered
enterprises within a separate customs territory •
Registered enterprises within enterprise zones
(The above provision was vetoed by President
Duterte because this go against the principle of
limiting the VAT zero-rating to direct exporters.)
3. Sale of raw materials or packaging materials to a
nonresident buyer for delivery to a resident local
export-oriented enterprise to be used in
manufacturing, processing, packaging or
repackaging and paid for in acceptable foreign
currency and accounted for in accordance with the
rules and regulations of the BSP;
 currency and accounted
for in accordance with
the rules and
regulations of the BSP;
Section 106 (A)(2) 3. Sale of raw materials 4. Sale of raw materials or packaging materials to
Zero-rated sale of or packaging materials export-oriented enterprise whose export sales
goods or properties to export-oriented exceed seventy percent (70%) of total annual
enterprise whose export production;
sales exceed seventy
percent (70%) of total
annual production; 4.
Sale of gold to BSP;
Section 106 (A)(2) 5. Those considered 5. Those considered export sales under Executive
Zero-rated sale of export sales under Order No. 226, otherwise known as the Omnibus
goods or properties Executive Order No. Investment Code of 198, and other special laws;
226, otherwise known and 6. The sale of goods, supplies, equipment and
as the Omnibus fuel to persons engaged in international shipping
Investment Code of 198, or international air-transport; provided that the
and other special laws; goods, supplies, equipment and fuel have been
6. The sale of goods, sold and used for international shipping and air-
supplies, equipment and transport operations;
fuel to persons engaged
in international shipping Additional provision:
or international air- Items 3, 4, and 5 shall be subject to 12% VAT and
transport operations; no longer be considered export sales subject to 0%
VAT upon the satisfaction of the following
conditions: • There is a successful establishment
and implementation of an enhanced vat refund
system that grants refunds of creditable input tax
within 90 days from the filing of the vat refund
application with the Bureau • All pending VAT
refund claims as of December 31, 2017 shall be
fully paid in cash by December 31, 2019.
 Deleted provision: The following shall no longer be
subject to 0% VAT: 1. Sale of gold to BSP 2.
Foreign-currency denominated sales
Section 108 (A) Sale or exchange of Sale or exchange of services include “sales of
Definition of sale or services include “sales electricity by generation companies, transmission
exchange of services of electricity by by any entity, and distribution companies,
generation companies, including electric Cooperatives.
transmission, and
distribution companies”.
Section 108 (B) Zero- The following are The following are entitled to VAT zero-rating: 1.
rated sale of services entitled to VAT zero- Processing, manufacturing or repacking goods for
rating: 1. Processing, other persons doing business outside the
manufacturing or Philippines which goods are subsequently
repacking goods for exported, where the services are paid for in
other persons doing acceptable foreign currency and accounted for in
business outside the accordance with the rules and regulations of the
Philippines which goods Bangko Sentral ng Pilipinas (BSP);
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);
Section 108 (B) Zero- 3. Services rendered to 3. Services rendered to persons or entities whose
rated sale of services persons or entities exemption under special laws or international
whose exemption under agreements to which the Philippines is a signatory
special laws or effectively subjects the supply of such services to
international zero percent (0%) rate; 4. Services rendered to
agreements to which persons engaged in international shipping or
the Philippines is a international air transport operations, including
signatory effectively leases of property for use thereof; provided, that
subjects the supply of these services shall be exclusively for international
such services to zero shipping or air transport operations;
percent (0%) rate; 4.
Services rendered to
persons engaged in
international shipping or
international air
transport operations,
including leases of
property for use
thereof;
5. Services performed 5. Services performed by subcontractors and/or
by subcontractors contractors in processing, converting, or
and/or contractors in manufacturing goods for an enterprise whose
processing, converting, export sales exceed seventy percent (70%) of total
or manufacturing goods annual production are no longer entitled to VAT
for an enterprise whose zerorating.
export sales exceed
seventy percent (70%)
of total annual
production are no
longer entitled to VAT
zerorating.
6. Transport of 6. Transport of passengers and cargo by domestic
passengers and cargo by air or sea vessels from the Philippines to a foreign
domestic air or sea country; 7. Sale of power or fuel generated
vessels from the through renewable sourced of energy such as but
Philippines to a foreign not limited to biomass, solar, wind, hydropower,
country; 7. Sale of geothermal, ocean energy, and other emerging
power or fuel generated energy sources using technologies such as fuel
through renewable cells and hydrogen fuels
 sourced of energy such 8. Services rendered to: • Registered enterprises
as but not limited to within a separate customs territory • Registered
biomass, solar, wind, enterprises within tourism enterprise zones
hydropower,
geothermal, ocean (Above provision was vetoed by President
energy, and other Duterte)
emerging energy
sources using Additional provision:
technologies such as Items 1 and 5 shall be subject to 12% VAT and no
fuel cells and hydrogen longer be considered export sales subject to 0%
fuels VAT upon the satisfaction of the following
conditions: • There is a successful establishment
and implementation of an enhanced vat refund
system that grants refunds of creditable input tax
within 90 days from the filing of the vat refund
application with the Bureau • All pending VAT
refund claims as of December 31, 2017 shall be
fully paid in cash by December 31, 2019
Section 108 Zero- Additional provision: The Department of Finance
rated sale of goods or shall establish a VAT Refund Center in the BIR and
properties and zero- BOC that will handle the processing and granting
rated sale of services of cash refunds or creditable input tax. 5% of the
total VAT collection of the BIR and BOC from the
immediately preceding year shall be •
automatically appropriated annually • treated as a
special account in the General Fund or as trust
receipts to fund claims for VAT refund.
Section 108 Zero- Additional provision: The BIR and BOC shall submit
rated sale of goods or to the Congressional Oversight Committee on the
properties and zero- Comprehensive Tax Reform Program a quarterly
rated sale of services report of all pending claims for refund and unused
fund.
Section 109 VAT- Sale of real properties Sale of real properties not primarily held for sale
exempt transactions not primarily held for to customers or held for lease in the ordinary
sale to customers or course of trade or business or real property
held for lease in the utilized for low-cost and socialized housing,
ordinary course of trade residential lot valued at ₱1,500,000 and below;
or business or real house and lot, and other residential dwellings
property utilized for valued at ₱2,500,000 and below. Beginning
low-cost and socialized January 1, 2021: • the VAT exemption shall not
housing, residential lot anymore apply to – Sale of Low-cost housing –
valued at ₱1,919,500 Sale of residential lot • The threshold selling price
and below; house and amount for sale of house and lot, and other
lot, and other residential dwellings shall be ₱2,000,000
residential dwellings
valued at ₱3,199,200
and below.
Section 109 VAT- (Q) Lease of a (Q) Lease of residential unit with monthly rental
exempt transactions residential unit with a not exceeding ₱15,000. (U) Additional proviso: xxx
monthly rental not Provided, That the fuel, goods, and supplies shall
exceeding ₱12,800 (U) be used for international shipping or air transport
Importation of fuel, operations;
goods and supplies by
persons engaged in Additional exempt transactions: (W) Sale or lease
international shipping or of goods and services to senior citizens and
air transport operations. persons with disabilities; (X) Transfer of property
pursuant to Section 40 (C)(2) of the NIRC, as
amended; (Y) Association dues, membership fees,
and other assessments and charges collected by
homeowners associations and condominium
corporations;
Section 109 VAT- (W) Sale or lease of (Z) Sale of gold to the BSP (AA) Sale of drugs and
exempt transactions goods or properties or medicines prescribed for diabetes, high
the performance of cholesterol, and hypertension beginning January
sevices other than the 1, 2019 Now (BB) Sale or lease of goods or
transactions specifically properties or the performance of services other
 mentioned as VAT- than the transactions mentioned in the preceding
exempt, the gross paragraphs, the gross annual sales and/or receipts
annual sales and/or do not exceed the amount of ₱3,000,000
receipts do not exceed
the amount of
₱1,919,500 (as
amended)
Section 110 (A)(2)(b) The input tax on the Amortization of input VAT shall only be allowed
Amortization of input purchase of capital until December 31, 2021. After such date,
VAT from purchases goods with a cost taxpayers with unutilized input vat on capital
of capital goods exceeding ₱1,000,000 goods purchased or imported shall be allowed to
shall be amortized apply the same as scheduled until fully utilized.
based on its useful life
or 60 months,
whichever is shorter.
Section 112 Refunds The Commissioner shall • The period of granting by the Commissioner of
or tax credits of input grant a refund or issue a refunds is decreased to 90 days (from 120 days)
VAT tax credit certificate for from the date of submission of complete
creditable input taxes documents in support of the application. • The
within 120 days from granting of tax credit instead of refund is removed.
the date of submission Additional proviso: Should the Commissioner find
of complete documents. that the grant of refund is not proper, the
Commissioner must state in writing the legal and
factual basis for the denial.