Under the 8% Commuted Tax Option

1. Option to the 8% income tax SHALL BE INVALIDATED.

2. Shall be subjected to REGULAR INCOME TAX for the entire year
3. 8% commuted tax as TAX CREDIT against regular income tax due
4. Will pay VAT starting the month after the receipts exceeded P3M

Assessment of percentage tax: must cover all sales or receipts realized

prior to the VAT registration
Non-registration as VAT taxpayer
Case: Failure to update VAT registration and paid percentage tax

• Vat-registrable taxpayers are subject to VAT without the benefit of

input VAT in the period they are not properly registered. (Penalty for
registrable persons)

• Shall file a claim for refund or credit as it is an erroneous payment of

tax considering that VAT should have been paid for that month
 Timing of Vat Registration
1. With an expectation to exceed the VAT threshold within 12 month
VAT registration + registration of new business or trade

2. Exceeding the VAT threshold

VAT registration before the end of the month following the month the thresold
exceeded

3. Franchise grantees of radio and television broadcasting, whose gross

annual receipt for the preceding calendar year exceeded P10M
VAT registration within 30 days frim the end of the calendar year

4. Below the threshold but opt to be registered as VAT taxpayer

Register not later than 10 days before the beginning of the taxable quarter
VAT Treatment of exempt transactions

A VAT-registered taxpayer who enters into a vat-exempt

transaction (i.e. mixed transactions) may also opt that the
VAT apply to his transactions which would have been
exempt under Section 109 of the NIRC.
Essence of voluntary the VAT registration

This option is beneficial for taxpayers who are into expert

business so that their export sales would be zero-rated
rather than merely exempt.

The optional VAT registration is not allowed to seld-

employed and or professional individuals who opted to
the 8% commuted tax under income taxation.
Revicability of VAT registration
1. Franchise grantees of radio or television, whether voluntary or
mandatory, is perpetually irrevocable.

2. 3-year lock-in period

Any person, other than franchise rantees of radio or television, who voluntarily
registered as VAT taxpayers shall not be allowed to cancel their VAT
registration for the next 3 years.

3. Registered as VAT taxpayers with an expectation to exceed the VAT

threshold but failed to exceed the same within 12 months of
operation may apply for cancellation of VAT registration.