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Rosben Orbeso Murillo, CPA

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Studied at Saint Paul School of Professional Studies
Work Experiences:
Taught both Accounting and Taxation for more than six (6) years.
Former Tax CPA reviewer at SPSBL CPA review center.
Rosben Orbeso Murillo, CPA
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On March 15, 2018, the Bureau of Internal Revenue in the Philippines issued the RR NO. 13, 2018. This regulation issued is to implement the Value Added Tax provisions under the Tax Reform for Acceleration and Inclusion (TRAIN). What is the effect of train law on value-added tax? Does it make better or get worst? Well, this article will give you the information that you should know about vat train law. It includes the new tax rate, tax base, who are subject to vat train law and how to file.

What is VAT Train Law?

A VAT is an indirect tax. Indirect tax means that the payment of the taxes can be passed on to the buyer, user or consumer of the goods, products or services received.

In VAT, any person whether a franchise grantee, who in the course of trade or business, sells, barters, exchange, leases, goods or properties, render services shall impose a percentage tax. However, the tax base should be limited only to the value-added to such goods, properties or services by the seller, transferor or lessor.

A Vat Registered Required to Pay Individual Tax under Train Law 2019?

Value-added tax is classified as a business tax. Business taxes are taxes imposed on any transactions related to the transfer of goods or properties and services to another with or without considerations.


While individual tax is an income tax. It means that any person who earned or generate income must be subject to tax. Income taxes include doctors, lawyers, accountant and common people who are earning incomes. 

Related Article: Practice of Profession Tax Train Law

Therefore, Value Added Tax is imposed on the sale of services or goods, properties while individual tax is a tax on the income received by the owner from his business.

What is vat threshold Philippines 2018 and tax rate?

A VAT is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines and on the importation of goods into the Philippines.

Valued added tax is imposed and collected on every service, sales, barter or exchange, or transactions “deemed sale” of a taxable goods or properties at the rate of twelve percent (12%) of the gross receipt or gross selling price in the money of the goods or properties sold, bartered, or exchanged or deemed sold in the Philippine. The tax base from 1, 919, 500 to a higher amount of 3, 000, 000. 


The tax base of the VAT is limited only to the value-added to such goods, properties, or services by the seller, transferor or lessor.

Who is Subject to Value Added Tax Train Law?

In General rule, any person is a VAT-registered and who is in the course of business or trade, sells, barters, exchange, leases goods or properties, renders services, and any person who imports goods shall be subject to the Value Added Tax (VAT).

Any person whose gross receipts or gross sales exceeds the threshold of Three Million Pesos (3,000,000) in one year shall be subject to VAT.

TIP: In the case of importation of taxable goods, the importer, whether an individual or corporation and whether or not made in the course of his trade or business, shall be liable to VAT.

How To File and Pay Valued Added Tax in the Philippines?

Every Person shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer.

VAT registered persons shall pay the value-added tax on a monthly basis.


UPDATE: On January 1, 20123, the filing and payment required under the Tax Code shall be done within twenty-five days (25) following the close of each taxable quarter.

Is a VAT Exempt Person not Subject to Percentage Tax (3%)?

The person who is not a VAT-registered the sales or receipts are exempt from payment of value-added tax but are required to pay a tax equivalent of Three percent (3%) of his gross quarterly sales or receipts.

However, any person engaged in cooperatives and who are self-employed individuals and professionals availing of the 8% tax on gross sales or receipts and other non-operating income shall be exempted from the payment of three percent (3%) other percentage tax.

Top visited post Today: a person who is engaged in sari-sari store in the Philippines.

UPDATE: On January 1, 2019, cooperatives and self-employed and professionals with total annual gross sales or gross receipts not exceeding Five Hundred Thousands pesos (500,000) shall be exempt from Value added tax and three percent(3%) of percentage tax.

Conclusions

Vat threshold is three million pesos and will be subject to a twelve percent (12%) tax rate based on the annual gross sales. A person may not be subject to vat train law if the gross sales or receipts do not exceed the vat threshold Philippines 2018. Although the gross sales or receipts do not meet the threshold amount, you may still register your business as a vat and claim the input tax. The vat threshold Philippines 2018 increased from the previous vat threshold. 

You may be interested to read about the transitory provisions: Can You Still Use the Invoices/Receipts (VAT Registered) as a Non-VAT?

If you have questions regarding the updates of vat under train law, please don’t be shy to drop your comments below.  Your thoughts are precious to us. Don’t forget to share and rate this if you like this article.

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