If you are engaged in doing business, self-employment, freelancing or practice of profession registered with the Bureau of Internal Revenue (BIR) in the Philippines, you are most likely subject to what is referred to as business tax.
It is called business tax as it is only applicable to person or entity engaged in doing business, self-employment, freelancing or practice of profession. Thus, for an instance, an individual taxpayer with compensation income from employment, are not required to file and pay business tax. On the other hand, a freelancer or self-employed, are required to file and pay business tax.
Two business tax to choose from is either of the following: VAT (Value Added Tax) and NON-VAT (also referred to as Person or Entity Exempt from VAT or Other Percentage Tax.)
What is a Business Tax?
Business tax is a tax imposed on the gross sales or receipts of a VAT or NON-VAT taxpayer. The tax rate ranges from 3% to 12% depending on the tax type, such as VAT or NON-VAT.
Important Note: For NON-VAT (Other Percentage Tax), per CREATE Law passed last March 2021, there’s a transitional (or temporary) lower rate of 1% from July 1, 2020 to June 30, 2023. And after which, beginning July 1, 2023, the other percentage tax for NON-VAT will go back to 3%.
Difference Between VAT and NON-VAT
To understand the difference between VAT and NON-VAT, read on below eleven (11) differences:
1. Business Formation
Business formation of the taxpayer can help in determining if it will be registered as VAT or NON-VAT.
Freelancers, Self-Employed, Professional, or Sole-Proprietors of a Business can be either VAT or NON-VAT depending on the nature and size of the business. Oftentimes, these individual taxpayers register as NON-VAT if their business operation is small resulting to annual sales within the threshold for NON-VAT. However, if they plan to grow and expand their business beyond the NON-VAT threshold, they will register as VAT.
On the other hand, Corporation, Partnership and One-Person Corporation (OPC) can also be NON-VAT registered if they meet the criteria. However, they are often advised or preferred to be VAT registered due to growth and expansion expectation beyond the NON-VAT threshold.
2. Tax Rate
When a taxpayer is VAT registered, in general, it is subject to 12% tax rate on its gross sales or receipts. Such tax is referred to as VAT or Output VAT. However, there are certain type of sales that are subject to 0% tax rate, referred to as Zero-Rated or Exempt.
On the other hand, if a taxpayer is NON-VAT registered, it is subject to Tax Rate of 1% (From July 1, 2020 to June 30, 2023) or 3% (prior to July 1, 2020 and starting July 1, 2023) on its gross sales or receipts. Such tax is referred to as Percentage Tax.
3. Annual Sales
Another way to determine if an entity should be VAT or NON-VAT is the Annual Gross Sales or Receipts.
To be qualified for NON-VAT (Person or Entity Exempt from VAT), the gross annual sales or receipts do not exceed P3,000,000, as updated by TRAIN Law effective January 1, 2018. (Note: This is subject to change in the future depending on BIR rules)
As such, if the taxpayer exceeds the gross annual sales or receipt threshold, they will automatically be classified as VAT registered.
4. Tax Deductions
Another important difference of VAT and NON-VAT is deductible tax from purchases/payments.
If VAT Registered, the amount of VAT paid on purchases can be used as deduction from the VAT Payable.
On the other, if the company is NON-VAT Registered, no deduction is allowed in computing the Percentage Tax Payable. Because the computation of tax due is based on Gross Quarterly Sales.
5. Tax Computation
Percentage tax (NON-VAT) is easier to compute compared to VAT.
Percentage Tax (NON-VAT) Formula: Quarterly Gross Sales x Tax Rate = Percentage Tax (NON-VAT)
Example: For the first quarter of 2021. Gross Quarter P200,000 x 1% (Transitional Percentage Tax Rate) = P2,000
On the other, VAT has the following computation.
Value-Added Tax (VAT) Formula: Output VAT – Input VAT = VAT Payable (VAT Credit)
Output VAT pertains to VAT collected on Sales or Receipts. Input VAT pertains to VAT on payments or purchases. If the Output VAT is bigger than Input VAT, it will result to VAT Payable. While if Input VAT is bigger than Output VAT, it will result to VAT Credit.
Example: Output VAT P120,000 – Input VAT P80,000 = VAT Payable of P40,000
6. Tax Collected from Customer
VAT is considered indirect tax while Percentage Tax is direct tax.
As an indirect tax, Value Added Tax (VAT) can be passed on to the customer. It can be added to the selling price or service fee collected from customer. Computation: Selling Price or Service Fee x VAT Rate
Example: Service Fee P10,000 + VAT P1,200 = Total Collected P11,200
On the other hand, as a direct tax, Percentage Tax (NON-VAT) is shouldered by the taxypayer and cannot be passed on to customers. Selling Price or Service will equal the Total Amount Collected.
Example: Service Fee P10,000 = Total Collected P10,000
7. Accounting Treatment and Recording
For VAT Registered, VAT on Sales (Output VAT) collected from customers are treated and recorded as liability, while VAT on Purchases (Input VAT) paid to vendors or suppliers are treated and recorded as asset. And then at the end of the month, an adjustment will be made to reflect if VAT Payable (Liability) or VAT Credit (Asset).
For NON-VAT Registered, Percentage Tax is treated as a direct expense normally recorded under Taxes and Licenses. It can be used as a valid deduction or expense.
8. BIR Form Used
For VAT Registered, the BIR Forms required to be filed are:
- BIR Form 2550M for the Monthly Value-Added Tax (VAT) Declaration, and;
- BIR Form 2550Q for the Quarterly Value-Added Tax (VAT) Return.
For NON-VAT Registered, the BIR Form required to be filed is only BIR Form 2551Q for the Quarterly Percentage Tax Return.
9. Frequency of Filing and Payment
For VAT Registered, filing and payment are as follows: every month using BIR Form 2550M and every quarter using BIR Form 2550Q. Overall, there will be twelve (12) tax returns filed in a normal year. See below guide following calendar period.
- BIR Form 2550M is filed every January, February, April, May, July, August, October, and November.
- BIR Form 2550Q is filed every end of the quarter: March, June, September and December.
For NON-VAT Registered, filing and payment is every end of the quarter using BIR Form 2551Q. Overall, there will be four (4) tax returns filed in a normal year. See below guide following calendar period.
- BIR Form 2551Q is filed every end of the quarter: March, June, September and December.
10. Deadline of Filing and Payment
For VAT Registered, the deadline of filing and payment are as follows: for monthly BIR Form 2550M, the deadline is 20th day of the following month, while for the quarterly BIR Form 2550Q, the deadline is 25th day of the following month after the close of the quarter. See below guide following calendar period.
- BIR Form 2550M deadline is as follows:
- For the month January (Due February 20),
- For the month February (Due March 20),
- For the month April (DueMay 20),
- For the month May (June 20),
- For the month July (August 20),
- For the month August (September 20),
- For the month October (November 20),
- For the month November (December 20).
- BIR Form 2550Q deadline is as follows:
- For the quarter ending March (Due April 25)
- For the quarter ending June (Due July 25)
- For the quarter ending September (Due October 25)
- For the quarter ending December (Due January 25 of next year)
For NON-VAT Registered, the deadline of filing and payment is every end of the quarter using BIR Form 2551Q, similar to BIR Form 2550Q. See below guide following calendar period.
- BIR Form 2551Q deadline is as follows:
- For the quarter ending March (Due April 25)
- For the quarter ending June (Due July 25)
- For the quarter ending September (Due October 25)
- For the quarter ending December (Due January 25 of next year)
11. Required Attachment
Last, but not the least, difference between VAT and NON-VAT is the required attachment to the BIR Form.
For VAT Registered, every end of the quarter, it is mandatory to submit an attachment referred to as Summary List of Sales, Purchase and Importation (SLSPI) together with BIR Form 2550Q. The deadline of submission is similar to the deadline of BIR Form 2550Q.
On the other hand, for NON-VAT registered, there is no attachment required to be submitted.
That’s it. Those are the eleven (11) top differences between vat and non-vat.
I hope this article gave you relevant information to know the differences between VAT and NON-VAT. Feel free to comment or ask question below. If you liked this article, please share it!
Sir,
If the company is under PEZA and since it has no output tax from where to offset its input tax, can it register as non-vat?
Hi Ms. Linalu Rivera. Thank you for asking. In our opinion, you may still register as VAT under “Zero-Rated Sales”. As such, you may be able to declare the input tax (VAT on purchases) and claim it later on as Tax Refund. If you register as Non-Vat, you might not be able to claim refund on the input taxes you pay.
Thank you for your reply.
Our company has registered with BIR but the COR does not indicate if it is VAT or non-vat; however, their OR says non-vat. Since they have a special tax rate of 5% on their gross profit, do you think they will have a problem with BIR if their registration is Non-VAT?
We don’t see any problem with the special tax rate of 5% ’cause this pertains to the Income Tax. We’re not sure how you can claim tax refund on input taxes on your purchases since you are not filing VAT. If you don’t plan to refund those input taxes, we think that the Non-Vat registration is okay. To be sure, you may confirm it to the RDO where the business is registered, if that’s okay.
Hi mpm,
Regarding the PEZA company, when will be the time to claim a tax refund?Is it possible to use this refund (offset) to tax payable other than income tax (if the company is net loss), like for EWT and Withholding Tax for Compensation?
Thanks,
Hi!
I would like to inquire if a NON-VAT registered entity should record input VAT in its books or should it be part of the expense incurred. In our case, our affiliate leases to us an office space wherein part of our payments is inclusive of VAT, how shall we record the said transaction? Thanks!
Hi Aaron, thank you for leaving a question. If you’re registered as Non-VAT, you will record the whole amount as Rent Expense (including the VAT).
Our company is net loss but already subject to Mcit. In some of the Income St that I see, MCIT is presented as current tax. However, Ive read that MCIT should be booked as Deferred asset. Which presentation is correct?
Thank you.
Hi Ms Linalu Rivera, thank you for asking about MCIT. However, MCIT is not covered in this article. We will create and publish an article regarding the topic in our next blog. Thank you
mahina ka palang CPA, simpleng tanong di mo masagot
Good day!
We are a non vat registered business and a client/company is imposing a 12% vat and 2% withholding tax deductions on the gross amount of our transaction. Is it possible that a client will make such deductions?
Thank you and more power! 🙂
Hi Ms Ces De Guzman, thank you for your question.
1. If you’re registered as NON-VAT, you are not required to put 12% VAT on your gross receipts or sales. You may present to your customer your BIR Certificate of Registration (COR) to show that your company is NON-VAT.
2. 2% withholding is required to be withheld on Income payments to prime contractors/sub-contractors. You may ask your client for a copy of BIR Letter requiring them to withheld 2%.
Hope this helps you.
How to calculate non vat on the new receipts?
Hi Tay Pantoja, this article may be helpful for you
Hello MPM… Thank you so much for providing this kind of means. This is very helpful to us specially as newby in business industry.
I just want to confirm my understanding. If we’re VAT registered, to make it simple, say.. i collected a total P20 VAT from customer however we paid our lease with P20 VAT on it, does this means that we don’t owe anything for BIR?
Thank you very much for taking time to answer this. That is very much appreciated!
Hi Jeff Triunfo. Yes, the VAT Payable will be zero. But please keep in mind that you still need to file a VAT Return and submit it to the BIR. Thank you for leaving a question. We’re glad that our article has been helpful for you.
Hi admin! i do appreciate your post here. if we purchase from a non vat company, can we deduct them an ewt?
Hi Gel Dimaya, glad this post has been helpful for you. what kind of withholding tax are you referring to?
hi! im referring to tax on purchase of goods to non vat company.. Thanks and God bless MPM consulting services.
Hi Gel, if you’re referring to “1% withholding tax on Income payments made by top 20,000 private corporations to their local/resident suppliers of goods”, you may withheld from your nonvat suppliers. Just provide them a copy of your BIR Letter that you are required to withheld 1% on purchases of goods. Hope that helps.
great help! Thank you. 🙂
You’re welcome. 🙂
Hi! I am a laundry shop business owner, a non-vat reg. . I have a manufacturing client (VAT Registered) and was advised me that they have a tax of 2% which should be included in my invoice. I am really confused with regards with this since I have no background in Business Tax and a new entrepreneur. I am also paying a tax of 3% from my total sales. Do this mean I have to pay a total of 5% tax? My Service Invoice issued by BIR doesn’t include the “tax” entity. It is just the “Total Sales” and “Total Amount Due”. Should I put their 2%tax to the Official Receipt?
Hi Deejay, Thank you for your question. We will tackle this in the next article we will post. the 2% means withholding tax. It is based and deducted from the Gross Sales. Example Sales is P1,000.00 a withholding tax of P20.00 will be deducted so you will only receive P980.00 from your customer. When they deduct 2%, ask for a BIR Form 2307 – Certificate of Withholding Tax so you can use this as deduction on your Income Tax (BIR Form 1701). Hope this helps
For a non-vat taxpayer paying rental of 16,800 to a VAT-registered lessor, what is our basis for the computation of the 5% EWT? should it be 16,800 (inclusive of VAT) or 15,000 (excluding VAT)?
Thank you.
It’s the P15,000 (excluding VAT).
This is really very helpful
We are a non-vat registered company. Out tax consultant is advising us to book all input vat on purchases as a separate input vat receivable. He tells us that we can apply for a tax credit refund and if it’s not approved, we can charge the aggregate amount to our Retained Earnings after the expiration of prescription period for the refund. Is this accepted? Is there some basis for this? Im more with the advise you gave to Mr. Aaron Aguilar.
Thank you very much
Hi Sir Joel, thank you for your comment/question. We advice that you seek professional consultation for proper handling of your case.
Hi, Our company is vat-exempt sale because they import agriculture food products. Can we cannot pay the input tax on payment of duties & taxes and others and how. Thanks.
Hi Kris, thank you for your comment. We will consider your question on the next articles we write and publish in our website.
good afternoon,
i would like to ask what would be my tax benefits if i purchase from vat reg & non-vet reg supplier…thanks
Hi Ms Teresa, thank you for your comment. We will consider your question on the next articles we write and publish in our website.
HI ADMIN, THIS ARTICLE IS VERY HELPFUL. JUST WANT TO ASK.. WE ARE NON VAT REGISTERED. LAST YEAR (I WAS NOT YET AROUND) THE COMPANY COLLECTED 12% VAT FROM A CLIENT BUT NOT ABLE TO PAY/REMIT IT TO BIR. NOW THE PAYOR DEMANDS FOR THE REFUND WHAT SHOULD WE DO?
Hi Mr Jovie, since you are non-vat registered, you are not required to collect and remit 12% VAT on your sales. You may refund the amount.
Hi MPM!
Were paying to a non-vat corp and they’re saying were not suppose to deduct ewt to them. We are a Top 20k Corp. Thanks!
Hi Ms Jen Dapilaga, thank you for your comment/question, you may give your vendor a copy of the BIR Letter of Notice that you are a withholding agent and is required to withheld tax on every purchase of goods or services.
Hello Sir,
We are a VAT registered business, we have clients who are NON-VAT,
they are asking us to deduct 12% VAT, because they are NON-VAT.
Some told us, they are tax exempted, we can put them under EXEMPT SALES
but others told us, no matter VAT nor NON-VAT, because we are VAT registered,
we are required to pay 12% VAT.
Hope you can clarify this.
Thank you ma’am/sir. 🙂
Hi Ms Mari Miranda, thank you for your comment/question. For those exempt from VAT, you may not impose/add the 12% VAT on the EXEMPT SALES provided they give you a certificate from the BIR, or other government agencies like those in the PEZA/BOI, as proof of their exemption from VAT. For NON-VAT, it is not applicable. You still need to add 12% VAT.
Hi mam,
Our Company is vat registered. We have sales from a company located in subic in which they have tax free certificate form SBMA.. can we report our sales from them as non vat sales? Please give us some clarifications. Thank you
Hi,
We are a Vat registered company, who would like to engaged in export business of auto parts. Is it possible?
Our supposed to be supplier will be from PEZA company. I understand that Peza company will charged us VAT, but what about taxes & duties, are we still subject to pay 1% taxes & duties?
We can’t charged output Vat on our export sales. Can we refund the Input Vat from BIR?
Can we occupy a warehouse from PEZA warehousing company to be used for our planned export business?
What will be our tax obligations if we will do export business ?
Thank you,
Rose
Hi Ms Rose, thank you for your comment. We advice that you seek professional consultation for proper handling of your case.
Hi MPM.
I am a sole-proprietor of a business. I got it registered with DTI last July. But had no chance of moving from there due to a busy schedule. unfortunately when I had a chance to register my business thru barangay level. They told me that businesses are required to renew registration every december. So it would be better if I would register my business during that Month, so I could start fresh. Start my business running for a whole year.
I just want to clarify something about VAT and NON-VAT. My business solely involves Printing Services, like souvenirs, gifts, or giveaways. Also we retail our products too. So we are Services/Retail. As I have read your article. NON VAT and VAT category would depend on the Nature of the business. With Service/ Retail as a nature Of Business what category would it fall?
and also, if it would fall to the NON VAT category, would it possible to enlist it to a VAT category. Because we cater some corporate accounts because we also offer corporate giveaways and printing services. Could you enlighten me with this?
Thank you and God bless! 🙂
Hi Mark, thank you for leaving a question. You may register under VAT, if that’s what your company prefers. But the requirement states that if your annual sales is more than P1,910,000.00 (this is subject to change), you are to be VAT registered. Otherwise, you can be NON-VAT.
Non-Vat meaning there is no Vat to be recognized at all. But in the case of exempted company, there is vat taking into account but only on the part, if in case, of the vat registered company. Isn’t it? Make sense.
Help! Thank you.
Hi MPM,
Thank you for posting blog like this. Very informative.
I work in a VAT registered company and we have customers who insists on deducting the amount of VAT on their payment citing that they are registered as NON VAT.
Just wondering if BIR has any RR/RMC which states that NON VAT registration of a business is not equivalent to VAT exemption (or anything to that effect) so we can show them proof of our point.
Thank you and God bless.
If they can present a VAT exempt certificate from BIR or other government agencies like PEZA, you cannot add VAT on your sale to this customer.
Hi MPM,
I would like to ask if for a single proprietorship, not exceeding 1,910,000 sals a year but was registered to by BIR VAT, is it still possible for me to change to NON VAT? I would like to change to Non Vat because my company is a retail / service industry manufacturing and designing interior fit outs such as cabinets and interior designing?
Hello MPM!
Thanks for this post – very helpful!
Though I want to clarify this scenario — our cooperative is VAT registered, though I read a ruling that I can be registered as Non-VAT but have to comply with certain requirements.
The question is this, say for example, we are currently selling at P112 per item (Sales of P100+ P12 output VAT); on the event that we are registered as Non-VAT, can we still sell at P112? Do you know specific rulings that can support this?
Thanks and God bless you!
Thank you for your comment. We advise you seek professional advise on this matter.
Hi!
How can we apply Vatable under Zero rated or what is the qualification and who are qualified to apply Vatable under Zero rated. .
Thank you for your question. We will consider it in our future articles.
Hi! If you are non-vat, does it follow that you should have percentage tax on your COR? We only have withholding expanded, income tax, and registration fee listed under tax type on our COR.
It depends if the registered business is a branch only.
hi,
am a sole proprietor(Non- Vat) and i have 2 branch, my main branch is Pharmacy in marikina and the other one is computer shop in Caloocan,where did i file my Monthly percentage return in computer shop? or add the gross sale of computer shop to Pharmacy for the Monthly percentage in Main Branch.
Yes, you need to consolidate the sales and expense of your computer shop to the main branch, pharmacy.
My supplier is VAT registered, I am a Non VAT registered business, how or is there a way that I can remit or exclude the 12% tax from my purchase, or through BIR filing? Will this make the items that I will sell cost more compared to the other businesses because I will try to make up for the 12% tax I got from my purchase and I can’t pass it on to my customers? Thank you.
Hello. I am secretary of my boss who is involved in real estate marketing services. She is not much knowledgeable about tax schemes so she relied to some accountant. Her marketing services company was first registered as NON-VAT. Then the accountant changed the tax from NON-VAT to VAT saying that it is advantageous to the company. NOW my question is, is it really advantageous for this service firm to be registered as VAT?
Before answering that question, please consider these facts:
1. The Annual Gross Receipts of the company does not exceed 1.9m not even 700K.
2. My boss started paying the accountant additional 2000 pesos monthly to do the filing.
3. My boss also become burdened of finding receipts to increase purchases, which she did not do when her company was yet registered as NON-VAT.
4. When I examined the 2550M and 2550Q, I noticed discrepancies in declaring the line of business. In 2550M it is declared as “REALTY”, then in 2550Q it is declared as “CONSTRUCTION” and in another as “IMPORT/EXPORT.”
I am really perplexed. Niloloko na ba kami? Are they taking advantage of our ignorance? Please give me an advice on what to do. SALAMAT PO AND MABUHAY.
i work in a manpower company and we are a VAT registered, almost our client is a VAT registered but there is this new client that we get who is a NON-VAT and they are requesting us to submit a NON-VAT OR because they told us they are not willing to pay the 12% VAT and they said they are willing to be billed for just 3%VAT..how is that so? is it ok that we still present them our present OR? im really confused becauses our Auditor said that even they are NON VAT we will still charge them 12% VAT because we are VATABLE company… please enlighten me, we doesnt want to loose this big client of ours
Hi,
We are selling services to a top 20k Netherlands company. They are withholding 2% as sales tax and deducting in their remittance to us. Question is, since they are company not in the Philippines, how can they pay BIR those taxes?
Thanks for this post – it’s very helpful
dear MPM,
I open my business which engage in services only like manpower service . I put my business this jan. 2014 only,and I registered as NON VAT business, now I have a client which is (vat registered) is this possible i can add 12%vat on their billing statement?
Hi Ms. Maria, I would like to ask a proposal service for my business like periodic taxes and consultation services….If you need some information pls let me know.
My email ads is fritz_gorio@yahoo.com
Looking forward for your response.
Federico Bernardo
FSB Builders & Construction Supply Co.
hi,
im a sole proprietor registered as non-vat selling ink for printers. My major customer are govt offices here in manila and as of december my accumulated income is 3M…They say i should register to BIR as VAT since i exceed the threshold. CAn i ask;
1. What are the the requirements?
2. If i become vat registered, can i increase my selling price to 12%?
Iam a non vat registered, is my percentage tax paid by the BIR is treated as expense in my profit and expense year end. thanks
Good Day!
Can a company inside freeport zone can used VAT and NV receipts? Thank you.
i worked in a vat registered company..i would like to ask if i can claim 3% input tax to our non-vat registered suppliers..please reply asap.
thanks
we are non-vat receipt, do we have to add vat since our COR is percentage tax,
what should i do? is it better non-vat or vat, we are manpower agency?
non-vat rules on manpower agency?
I am registered with BIR as VAT with property specialist as line of business. We were asked by the company I was working for before to apply for this type as requirement for the release of commission. However, I am no longer with that company nor am practicing the profession but I am still expecting to receive some commissions. Will it be ok to have my COR as VAT be cancelled and have it replaced as NON VAT since I am no longer into selling. Maybe through this I can somehow lessen the taxes I am paying since I will no longer be subjected to 12% taxes.
Thank you.
What a blessing to finally found a truly informative website for accounting!
I just want to ask the effects of VAT on both service income and purchases (import & local) of a service cooperative. Hope you really give us light on this.
Good a.m.
Hi Sir/Mam,
We are a vat-registered company last 2012. We transferred last 2013 our principal office at Clark Freeport Pampanga and our branch at Muntinlupa City. We have a project at Clark for the 2nd qtrs 2013 and per BIR clark our invoices and original receipts were
printed as non-vat. We have also projects outside clark lat 2013. For 2014 Jan. we submitted to our client Pepsi our invoice with non-vat header. our billings are onhold unitl we can submit the revise invoice as vat-registerd and as per our accreditation to pepsi is vat-registered. what will be the best solution so we can collect our billings.
Thank you
Hi, thanks for this post. I am a Non-Vat registered business and my current year gross sales exceed PhP1,910,000.00. Do I have to register to VAT-reg business, since my sales exceed the ceiling? I’m not sure if my income next year will exceed PhP1,910,000.00. Thanks you.
For vat registered what form are we going to issue to our client 2306 0r 2307. when do we used this form 2306 and form 2307
Hi MPM,
I am working in a VAT corporation recently registered and is engaged in services. My question is this, can I include purchases as Non-VAT if the receipts doesn’t have TIN Number on it? How about supplies bought in the Market where purchases were written in a piece of paper and no TIN number on it?
Thank you very much!
Hi! I am a local employee and will be having a non-VAT registered business. How will the additional 3% income tax affect my total income tax? For example, my income tax on my salary is 30%. If my gross sales for the year is 500,000, will the 30% only apply to the salary and 3% to the gross sales?
Good afternoon!
Just want to ask, if the customer is a VAT-registered, do we need to withheld 2% at source? Thanks!
Hi MPM,
Recently, I have registered my business as Non-VAT for Hauling and Trucking Services. But when we consulted from a book keeper, he advised us that our CoR might be changed to VAT Registered because there is a limit on Gross sales for Non-VAT registered. What is your opinion on this matter?
Thanks
I am a sole proprietor (VAT registered). I purchased parts for repair of our equipment. The suppliers are Non-VAT registered. Since my business is VAT registered, it is necessary to add VAT to my payment?
Can I still include this in the itemized deductions (expenses) even it I was not able to pay VAT for the parts?
Thank you very much.
Hi, we are a zero-rated manufacturing corp because we are under PEZA. Also we are one of the top 20,000 corporations in the Philippines so we are required to deduct EWTs on our payments. Now we have a supplier that is claiming we shouldnt have deducted 1% because according to them they are also zero-rated, but when asked to show us their cerificates, they sent us COR from the BOI dated 1998 and a VAT certification from BIR dated 2003, stating that they are subject to
a. 0% on export sales and b. 10% on local sales
I still believe that we are correct with deducting the 1%, mainly because VAT is different from EWT, however upon researching thru internet, we found out that there are certain incomes that shall not be subjected to EWT.
To quote:
“It is important to be informed that there are income payments exempt from withholding tax. Sec 2.57.5 of RR 2-98 lists the income payments exempted from withholding, thus withholding of creditable withholding tax prescribed in RR2-98 shall not apply to income payments made to the following:
A.) National government and its instrumentalities, including provincial, city or municipal governments;
B.) Persons enjoying exemption from payment of income taxes pursuant to the provisions of any law, general or special, such as but not limited to the following:
(1) sales of real property by a corporation registered with HLURB or HUDCC…
(2) Corporations registered with the Board of Investments (BOI) and enjoying exemption from the income tax (income tax holiday) provided by RA 7916 and the Omnibus Investment Code of 1987.
(3) Corporations which are exempt from income tax under Sec. 30 of NIRC to wit, GSIS, SSS, PHIC, PCSO, PAGCOR….”
Questions:
1. I believe our supplier now falls within the #2 criteria. But is it still valid given that the documents provided are for 2008 and 2003?
2. Just to clarify the #2 criteria, what we will be needing for our supplier to provide are a BOI certificate, RA 7916 document, and a document of the Omnibus code? Will absence of one document cancel the exemption?
3. Are there any other entities exempted form EWT aside from above?
Thanks and God bless.
Hello.
I’m a new business owner (sole proprietorship) supplying costumes for big TV networks. I was advised to register as VAT because my clients are large companies, but I don’t see myself passing the P1.5M sales mark within the year. Maybe I’d hit 500k max. Is there a way to switch from VAT to NonVAT? If so, would it be wise? Is one safer than the other in terms of my personal income tax? Would one give me better chances for a return? Also Is it unfair to my clients, or is my 12% VAT something they can write off anyway in the end. Thanks for your advice. I kinda rushed with my BIR registration because my client needed an Official Receipt so I didnt really have a chance to get a second opinion. So here I am ready to fill out the OR and a little shocked at how much 12% really adds up to.
Hi! We’re a Non-vat partnership, and our biz is fruits selling. Is there a rule that we should be getting receipts to all our expenses? How about the fruits we are buying in the market (where we get our fruits supplies), is there a need to ask for receipts from them? Also, is it mandatory to have tax on Compensation? We are only giving below minimum to our employees since they are just 2. Thank you!!!
Accdg. to the BIR offiicer in our area, we Sales Invoices are issued for cash or credit sale of goods. Official receipts are only issued by service businesses. Collection receipts (not Official Receipts) are issued to for collection of sales on account…Am now confused. YOu said official receipts are issued instead for collection of accounts.
HI! I understand from your blog that input vat from VAT purchases can be offset against output VAT (VAT sales). My question is this: Can I utilize the same VAT purchases as deductions for my income tax computation? Or I can only use non-vat and payroll expense for the purpose of computing my income tax?
Hello! I’m a registered insurance agent of Mapfre Insular. I am required to issue receipt when collecting commissions from them. Since I am a new agent, i am at lost what to use for my registration, VAT or NON VAT. Thanks. God bless.
DEAR ALL,
PANO PO BA MALALAMAN KUNG VAT OR NON VAT REGISTERED KA?
THANKS,
JASON
Hi,
We will be opening a machine shop and I would like to know what are the reports to make monthly, quarterly, semi-annually and annually if we will register as Non-VAT? On the other hand please provide reporting information if we will register as VAT registered and Zero-rated.
Regards,
Rose
Hi,
1. We are a Non-VAT company.
2. Most of our vendors are VAT registered.
3. What is the proper presentation of sales to be issued by the vendor?
4. Some of the vendors are issuing us with invoices/billings including 12% VAT. Should we pay gross or net of VAT?
Thanks!
Hello, we are a Non-VAT registered company, our business is buying and selling of Agricultural products, the question is, if we buy directly from the farmers their harvest products we don’t incur Input Tax since we not VAT Registered, but if we sell their products not in their original state, or for example their Cassava crops, our company will granulate these and then sell them, will the sale be Vatable since the produce underwent the process of granulation. Tnx
Hi Admin,
Am planning to get BIR receipt since as I am into real estate on top of my current employment. My question is — will RDO code has to do with my receipts. I plan to get in Cavite since I reside here, but current employer is based in Makati.
What do you think should I do?
We have a NON-VAT customer they want us to deduct the 12% VAT to the total amount of the item they purchased from us. It is right we deduct the 12% VAT from the total amount because if we do that we don”t have profit instead of it we incurred losses. What is the better explanation of it. Thank you.
Hello,
Glad to have your column here. I need clarifications on the following:
My company did some service as a sub-contractor of another company. After completing our job scope we submitted our invoice to the main contractor but they said they will deduct the 12% VAT from our invoice. My company is registered as Non Vat and we are paying 3% from our monthly income. I refused to agree with the main contractor as my company will end up paying 15%. What is the right thing to deal with this?
Thanks
Good day,
We are collecting from a dept store and we are the supplier. We are a NON VAT company. The dept store is VAT registered. They sent us a sales report with cost non vat (total 17800) and cost with Vat (19800). Which one do we get? thanks
I have a new company, a sole proprietorship type, and we plan to sell consumer products where the cost that they will pass to us is already VAT-inclusive.
Should I apply for a VAT or NON-VAT registered business?
Your advise will be highly appreciated.
thanks!
are cell site lessee considered a zero rated vat clients.
Is it okay to accrue output vat? for example, our company has monthly rental income and per contract payment of which will fall due first week of the next month. Now every end of the month, i prepared accrual on rent income. Is it correct to accrue also the output vat? My proforma entry is (Example 11,200 inclusive of vat)
Dr. Accrued Rent 11,200
Cr.Output vat 1,200
Cr.Rent Income 10,000
Hi MPM,
I franchised a small time “bayad center”. I was registered under Percentage Tax, my business under NON VAT, right? Do BIR have limit on sales wherein they will not collect Percentage Tax? Thanks!
hi Admin Maria
we are non VAT registered, our business corporation is just started, we have a problem on our receipt, the ATP that was issued by the BIR to the authorized printing press is VAT, therefore our OR is VAT, on the run our collecting agent input a 12% vat to our client and its just late that we noticed that something wrong with our receipt that it must be NON VAT and not VAT REG TIN, and now were messed up, what should we do to our client that been deducted by 12%…?
Hi if our client is a non vat are they also subject for withholding tax
How much is the gross income for non vat? and how much is the gross income for vat?
Thanks
Hi MPM,
We are foreign company engaging construction for a resort (not contractor) and we are depending on the Tax Refund as our means of return of investment under E.O. 226 (Investment Priority Plan). If we are VAT reg. can we still accept Non-Vat receipts or should we only accept Vat receipts to avail a refund?
Thanks and more power.
hi! our company is non-vat. but our gross receipt is more than 2M this month. are we going to pay 3% or a 12% tax this month? do we need to get a revised COR? and what will be the basis for 3%, those already paid only or even the unpaid? hoping for your reply. thank you!
Hi! would like to inquire what is the minimum gross annual sales to be qualified as VAT registered? Thanks!
good morning
i have concern about withholding taxes
question: what are the implication of bir registered corpotion to non vat or non bir registered supplier if theres a transaction ex, rental it is right that the corporation suffered the wilttholding tax in rental ..there is any regulation about this scenario
hi we are a NON-VAT company which offers services (band,entertainment,sound system) if a client requires OR, shouldn’t I add taxes to the price to compensate for the tax that I will pay BIR. some client’s also deduct withholding tax from our price, with this I will be asking the company to give me BIR form 2301 so it will be deducted when we pay our taxes?
pls enlighten me, we’re just new in the business just this year.thanks
Even the Penalty or service charge is subject for VAT? and included for the deduction of EWT?
Hi admin. This “x” company ( zer0-rated tax/vat-exempt) is renting our equipments. So, we don’t obviously charge them with 12% Vat. But they still withhold 5% withholding tax on their zero-rated vat payments. Is this correct? They attach Bir form 2307, with 5% EWT. If this is correct, when should i file this withheld tax? In 2550Q? or 1701Q?
My company (service center) is a non vat. recently i provide service and parts with a known school, We agreed the amount of the service and parts. When we finished the job, and about to collect the payment on the first check they issue they deducted 1% on the total amount, but we find out that the amount is way over to our bill. So they Re – issue a new check but this time they deducted 2% on the actual bill. We told them that we are a non vat. Still they deduct 2%. and they give us a 2307 form. can they really do this.or can they choose 1% or 2 % to deduct? Thank you
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We have a food chain business, we registered as a NON-VAT in BIR, What forms should we use in paying our tax(Could it be in monthly/quarterly or annually)?
hello!
my niece is a doctor and a vat registered. just want to ask the rate of vat to be withheld by private company for the services of a doctor. are they allowed to deduct vat from prof.services.
thanks!
Private hospital, i mean.
some of my clients requires Sales Invoice and OR (both)… We sell electronic products…
For i know that SI is for materials and OR is for services… can i insist only SI,?
and what is the difference bet Sales invoice and Cash Invoice?
Thanks
hi,
we are non vat, we still need to file 1601 c if all our employee are minimum earner and we still needt to file 1601 e if we are not renting the place? thank you
Hi MPM, good day, first of all, thank u so much for this helpful website nyo, ako din po sana matulungan nyo. sole proprietor po ako ng printing business, pero maliit lang po since sa bahay lang din po ako, mag start pa lng po sana ako, paano po mag aaply nun ?pede po ba ako mag NON VAT? Salamat po.
Hi,
i work in a VAT- Registered company, and we are adding 12% VAT to our suppliers who are VAT-Registered only. However, our company is paying 12% VAT to the BIR in every 20th day of the Month, thus, and we are paying much higher amount because some of our suppliers are NON VAT-Registered. Can we ask them to become VAT-Registered? or are we entitled to ask them for that?
Thank you and You are blessed 🙂
we are a VAT-registered service company. how do we bill clients who are non-VAT for our services rendered to them? do we add 12% VAT?
thank you and God bless!
Hi,
Can I have your expert answer/opinion in this transaction? Thanks.
Situation: The Lessee is a Non-VAT registered enterprise, while the Lessor is a VAT registered enterprise. The lessee paid the rent amounting to P 15,000.00 and withheld the creditable withholding tax at 5%. What amount should be the tax basis of the lessee for withholding the 5% expanded withholding tax? Is it the gross amount (which is P 15,000.00) or the net of vat amount (P 15,000.00 / 1.12)? Thanks in advance.
hi tanong ko lng vat registered kmi me client kmi ayaw mgpakaltas vat pero d namin alam kung non vat or vat reg cla.
we are a vat company, and i have a customer non vat and they will less 12 percent vat on our supplies once delivered, do we need to deduct the 12 percent vat on our quotation? what documents do we need if we deduct 12 percent vat from our customer>
Gdeve maam,I applied in a recruitment agency as domestic helper abroad.the problem is they refuse to issue receipts.they issue certificate of payment but their is no amount stated.they just let us sign in a notebook beside our name.is this legal?wat shoul i do?
Hi, good afternoon!
Thank you for this informative article. If my company is VAT registered, and we have customers who are VAT Exempt/Zero rated (with proof of PEZA certificate, etc.), my questions are:
1. Are we required to present the VAT amount on the face of the sales invoice (although it will be valued at Php 0.00)?
2. Relatively, in our books we will still record the Output Tax (but valued also at Php 0.00?
3. How do we present it in the VAT return?
Thanks!
We are a local incorporated company in 2013 and did not register for VAT. We are involved in education services by offering foreign qualification in Ph. Students are to pay for (i) registration fee, (ii) certification fee (iii) books fee. These fees are to be send to the foreign institute. The institute will send the printed copies of the registration & certificate of the students. Their books will be shipped too.
Do all these attract VAT? If they do, how much?
HI,
IM CONFUSED IN COMPUTING EWT .. WE ARE NON-VAT REG COMPANY WHICH IS REAL ESTATE.. THE REAL ESTATE AGENT IS VAT REG.. HOW WOULD I COMPUTE THEIR EWT? THANX
Hi everyone! Here’s the situation: Both the buyer and the seller are VAT Registered taxpayers. Now, they have transactions to each other then the seller had used NON-VAT receipts. In the first transaction using NON-VAT receipt, the buyer claim input tax, then in the second it was no longer claiming input tax. The question is the buyer can still claim its input tax with the transactions in NON-VAT receipts with TIN that the seller is VAT-Registered ever since. I hope you will help me guys. Thank you.
Hi mpm
Ask q lang if there are penalties on not paying the vat on time?
Thanks!
Hi,
We are a VAT reg. company and we rendered service to the co. under percentage tax. They’re asking to deduct the 12% vat on our billings. Can we issue OR and indicate the sales as VAT exempt Sales?
Another thing is we rendered docking assistance to a foreign vessel during their port of call in the Phils. Is it correct to issue VAT reg. OR and indicate the sales as Zero Rated?
Thank you in advance.
Hi we are an international NGO with Non-VAT registration. Are we obliged to pay the 12% VAT to our VAT registered suppliers? Thanks!
I would like to ask if it is possible to have rental fees plus VAT that will be shouldered by the lessee? is that correct? or depending on the contract between the lessor and lessee. For example the rental fees is 15k + 12%VAT = Rent Expense that the lessee will shoulder. Thank you so much for the answer.
Hi! We are VAT registered but our transactions is zero rated sales/receipts since our customers is in other country. How do we file our Monthly Value Added Tax (BIR 2550M)? Can you show us an equation to use? Thanks!!!
hi I would like to ask if a medical supplier like selling oxygen, wheelchair etc. and are registered as Non-Vat Registered individual, is it possible that their gross sales in a year would not exceed 1.5m? considering their nature of business?. or are their any BIR Rulings exempting those business related to medical?..i need an answer…thank you
hi Im just about to start a travel agency business. what tax is applicable for this business VAT or NON-VAT Thank you.
what about the association? what type of tax will b paid/ or how much percentage should we pay tax? what should we file for as non vat payor? some schools payments has 3 % withheld , whats the effect on us with this. how will we do with it.
how will i know if a establishment really is bir registered?
Hi! This is Bea, accounting technology student..can I ask help on how to explain the two basis for percentage taxes? Thank you!
We are a non-profit religious organization. We distribute free bibles for free. I would like to ask if we can be entitled or apply for a vat exemption certificate so all our puchases can be without vat? Thank you very much. God bless you more!
Hi, just want to be clarified on how real estate brokers who are vat registered fill up BIR 2550 to determine how much should be paid for the month?how should i determine the input and output vat since my receipts are commissions in nature.your immediate reply is badly needed and help in my compliance.thank you so much.
Hi, we are vat registered trucking company. We purchased tractor head amounting to P1.8M, can we deduct the whole input taxes or shall it deferred for how many months if the useful life is 8 yrs? What if the vendor did not issue invoice but executed deed of absolute sale, is there input tax we can claim on that sale? Thank you.
We are a non-vat sole proprietorship company engage in electrical repair services. We expect project awards over PhP 1.5M this month & on-wards. Our clients want our proposal and bids to be vat inclusive. How can we do transactions re progress billings in the event of a contract award?
hello! i just wanted to ask what does it mean if your lessor says your rental monthly is 16,500 vat exclusive? Do we have to pay for withholding tax monthly? tnxs
Hi! This is so helpful and informative. I just wanna ask, I have a client who is a sole proprietor and works as a consultant. I am his bookkeeper. How would it be because he is VAT registered but there are certain clients of his firm like schools who are non-vat. Should we collect VAT from them? Hoping for an RR reference to this, the BIR has not been very helpful with this even if I walk in or call their hotline. Thanks!
Hi sir,
ive registered my business last october 20. my business is metal fabrication. we usually fabricate on jobsite like what most ontractors are doing. until now, i cant decide between VAT or Non-VAT. please help me decide. thankyou.
I am a real estate broker who registered as non vat . I am being charge 12% vat on the commission that
Is due me and also 15% EWT is being deducted from my commission.
I told them that we are just part of marketing group of a developer. We are not into manufacturing goods
Or service provider. Our company in one of the marketing broker of a developer. They told me that since
I am a non vat registered then they will charge 12% vat.
I am confused and need to know why I am being charge to pay sales tax. Please enlighten me on this
Issue. Thank you.
Good Day,
i would like to ask about the tax for economic zone if company outside economic zone purchase a product with us how much will be the tax for example they buy worth 100000 pesos with how can be the computation?
Hello! I have a clarifications.. An insurance agent is subject to Percentage Tax but once his sales are beyond the threshold of P1.5M, then he is required to to be a VAT registered. What if in the succeeding years, his sales will be below the threshold, can he change back to Percentage Tax? Or can he cancel his registration from VAT to Percentage? Second Question, if he’s a VAT registered (insurance agent), can he claim for an input tax? Thank you
Hi MPM.
I want to establish a construction company (sole prop). Let us say I have a 1M (labor and materials), then I will just add my let us say 10% profit which will become 1.1M. Then add 12% VAT which will now be 1.232M (This will now be my contract price). Is this right?
Thanks again, and your text above was very helpful.
HI MPM,
I am a sole proprietor of a construction company. My direct cost is let us say 1M (labor and materials). So it means, I will add 10% (let us say my profit) to 1M to make it 1.1M then add another 12% as VAT to 1.1M which will now become 1.232M. Therefore, 132K will be to BIR? Hope you can help me enlighten on this.
Many thanks
good evening.
i just want to know why some of my client asking if my business is vatable? but my business is non-vat. is there any problem will appear in bir? and my business is registered as in market only, if already registered in bir what receipt will i have? i have only sales invoice. can i print a official receipt to accredited printing press?
thank you and god bless.
Hi MPM,
We are a non-vat registered sole proprietorship with a registered business line NON-SPECIALIZED STORES: tobacco, beverages, foods. We have this client a corporation which we were able to supply them on various items amounting from 200 thousand up to 300 thousand in almost 10 times already. Now when it comes to the items like delivery truck van, starex van, sadam truck, etc. the purchaser in-charge refused to get these items from us as she said we have problem with our invoice. I doubt if this is because that our invoice indicates non-vat registration. Please advise us with this if possible please send your advises also in our mobile number 09465684620. Thank you very much….
hi. if a nonvat taxpayer withheld expanded wtax from his rental to a vat registered entity, how should the ewt be computed? 5% net of vat or 5% of the whole amount?
What does it mean when the Official Receipt says Non Vat?
Hi po 🙂 Hope you could help me clarify the following.
Currently, A company is reporting Revenues (services) on a particular month (VAT) based on the revenues deposited in a particular month (example – March 31 (OR date) collections but are DEPOSITED in April are reported in April , June 30 collection but deposited in July and reported in July and so on).
Is the Company doing it right that they are reporting REVENUES based on the DATE of DEPOSIT? What ruling will support this? And if they are doing it wrong, what should the company be doing and what should be their basis.
Thank you very much.
Your response will be greatly appreciated 🙂
Hi po:)
Hope you could help clarify the following.
A company is reporting on VAT based on the date deposited (like March 31 collections (OR date) but deposited in April and reported in VAT on April) and so on for the other months/quarter.
Is the company reporting it correctly and what Ruling will support this?
Your response will be greatly appreciated.
Thank you very much:)
My father, a senior citizen was hospitalised.
The hospital refuses to give us a VAT exemption, saying they are already VAT-exempt.
However, their COR states that they are a VAT-registered company.
What activities of the hospital are VAT exempt and what are VATable?
Are medicines and supplies VAT exempt too?
I hope you can help me soonest as we are settling our issues with the hospital.
Thank you very much.
Hi we are a whole seller and we brought our goods with vat inc. but we have some client which is non-vat I can still claim the 12% vat and how?
Sir, would you know what others requirements to be filed when a sole propr is non-vat? is there a need to file monthly/quarterly income tax?
a sole proprietor has two businesses. is it possible that he be a VAT registered in one business and NON Vat on his other business?
I am confused about VAT and non-VAT up to this point. I am the sole owner of my rental units. They are commercial units with very minimal rent. How do I register in BIR? as VAT or non-VAT?
Dear Mam Yanuaria,
I am selling Fresh Fish Dealer, under Section 109(1)(A) of the National Internal Revenue Code (Tax Code) of 1997, as amended, the sale or importation of agricultural and marine food products in their original state is exempt from VAT, my question now is, if my annual gross sales exceed 1,910,000 pesos, I am still VAT exempt ? Thank you and more power, Jovi
Our company is a VAT registered service entity. We have purchases from Non-VAT registered suppliers of goods and services (who cannot pass on vat). How can we record such transactions? In the preparation of VAT relief, are they to be classify under VAt exempt transactions?
Thanks..
Our company is selling house and lot under low cost which is vat exempted and not remitted output tax. Only output tax from Rental Income are subject for output tax remittance. My question is can we use the Input tax from Contractors (vat registered) for the deduction of Output tax from rental Income? Or what kind of purchases or services can we used for the input taxes? Thanks
hi I’m a non-vat registered (agricultural & Feeds supplier). My supplier are a combination of Vat registered ( gamefowl feeds) and a non vat registered (fertilizer). I do not impose 12% vat selling this goods.
Am I correct?how will i record it this? Im using form 2551M
Hi, we have an existing business which is Printing and it is already VAT. It is a Sole Proprietorship. We are planning to put up a different business but still under the TIN of the existing business (because of Sole Prop). Will it be also VAT or can I apply it with Non-VAT?
Thanks!
Gud day!
Sir/mam, I am working in a flowershop business and our customer requested for a receipt…I gave them a sales invoice but they are asking for an official receipt. Problem is we are using sales invoice and it is registered in BIR. And are we to be considered a non-vat taxpayer?
Thank you foe your time.
Can we claim input tax on purchase of goods & services from Government Agency & GOCC?
Hi,
I would like to know if a secondary sale of lot is no longer vatable even if an entity is a vatable entity?
Thank you so much
Hi,
We are non-vat registered outlet but our lessor is vat registered. We paid monthly 6,420.00 to our rental and subject to pay every month 300.00 ewt/1601-e to bir, Should i deduct 1601-e monthly paid to 1701? In which category will be input? It should be in creditable tax withheld for the first three quarters? What about we paid monthly 2551-m?Thanks!
Hi!
We are non-vat registered business entity. Our lessor is vat registered. We paid 1601-e for 5% monthly. Is this 1601-e amount paid will be deducted to our 1701 monthly? Thanks
hi po, my inquiry is regarding the percentage tax since the company i’m referring to is Nov-Vat registered. The 3% of Sales that we are paying every month is it an expense or liability? what is the proper posting of such account? And also the amounts that we are paying using form 2307, what is the proper recording of it in the books? thanks in advance…
Good day! I am anxious knowing that if my income would reach around 2M, it would become vatable. I have mixed income in my profession and currently paying optional deduction of 40%. I am now paying 3%monthly tax which is not deductible from my annual tax. Is the 12% vat I am going to pay monthly(in case I reach 2M) be deductible from my annual tax? I mean,I have 40% optional deduction which enable me to pay higher than those of businesses which could deduct taxes from their vatable purchased goods,services or rentals. Those are not applicable to my profession. Thank you.
Good Day!
I am a medical professional and currently registered as VAT. Here are my questions:
1. If I charge 500php, VAT-inclusive, I will pay 60php for monthly vat for 1 patient?
2. if patient is senior citizen (VAT-exempt), they will only pay 440php—am i going to include them in the gross monthly vat (2550M)?
3. In the computation of monthly and quarterly VAT (2550M and 2550Q), does the 40% OSD I ticked during my annual ITR applicable as deduction/expenses or I still have to separately consolidate VAT receipts and get the input tax?
4. in the computation for 1701 and 1701Q, am I going to include only the vatable income or the gross income including the nonVAT income (from Senior citizens and PWDS)?
Thank you very much!
Good day, our company is Non Vat and one of our customer reported it to BIR as VAT. What should I do?
Hi,
if the company has 60 branches,will it be a non vat registered on their official receipts?
considering the nature of business is a pawnhop.
Hi,
Just want to verify lang po…we are a insurance agent, registered as vat. but we are paying percentage tax…because we do not exceed the 1.9M limit… okay lang po ba yun?
Thank you!
Good Day!
Our company is VAT – Registered but we sell both VAT and Non-VAT Goods like seedlings. How should we treat Purchases of VAT-Exempt goods from VAT-registered companies. and Purchases from a Non-VAT Companies?
Regards,
-Jess
Hi Sir,
Is there any limitations to claim the input tax? How about those freight & handling? Can we claim the input tax even we didn’t withhold?
I’m working for a restaurant who has just opened one year ago. we issued a NON-VAT OR. one of our customer demand that a 12% VAT be deducted from his bill to which our cashier complied. It means that a total of P420 is deducted from his P3,500. bill. is this correct> Thanks.
Hi, I just want to ask. Is a VAT exempt transaction subject to withholding tax also? Say for example for security services, Some Portion is Vatable and some portion is VAT exempt. Is the VAT exempt transaction subject to the 2% withholding? Thanks.
our company is VAT-registered, we have a client who is also VAT-registered. Its client is a PEZA locator which is non-VAT, our client would like to purchase materials from our company but our VAT-registered client would like us to take-out the VAT since its client has also taken-out the VAT from its contract. is there any way our VAT-registered client use the exemption? is there any permit to apply for on a periodic or case-to-case/project basis only? please clarify. thank you.
Hi. We started our little business last month, we have a capital of 150 thousand pesos. From the first purchase we took on our supplier they issued a Non-VAT receipt. Are we excluded from Taxes?
hello po….
sir ask q po sana kung pwede po ba magclaim ng 2306 ang buyer ay vat registered sa seller po na non-vat po…
hi po….
sir ask q po sana if a vat registered buyer can claim the 2306 to a non vat supplier…or what maybe the suggestion computation if the buyer is vat and the supplier of goods is non vat….
Im a non vat reg… our client is a vat reg… how would i prepare my receipts.. before when we stll dont have our own business.. our principal contractor billed his client.. freight charge plus 12% vat equals total freight…
since now we no longer under our previous contractor and now were using our own reg company… i was womdering how will i compute our charge… will it be freight rate plus the 3% tax only or i can still had it like before? Charge plus 12%….
I’d like to ask if a VAT-exempt company is allowed to issue withholding tax to my company which is a VAT company. They are the customer, I’m the supplier.
As I understand, withholding taxes are calculated from the VAT so logically, Zero-rated VAT and VAT-exempt companies cannot deduct from their payment to us.
Unless there is a provision that allows them that deduction? Would appreciate a reply.
Thank you.
HI, Good day!
Just want to know.. we are VAT and our supplier is NON-VAT? do we need to withheld (2307)? the product we purchase is amounting to Php 120,000.00? thanks…
hi, good day!
just want to know that .. do we need to withheld to our supplier? we purchase a product worth 120k, we are VAT and they are NON-VAT.
thanks
Hi! thanks for your post.
I am a sole proprietor of a general merchandise and at the same time an insurance agent who wants to start a money changer business. I want to amend the name of our general merchandise in the DTI for me to attach the money changer on our existing general merchandise business. Will the Bir categorised me as Vat registered since I have three businesses under my name and there is the possibility that I will exceed the 1,900,000 gross income?
thanks
jen
Hi admin. Your topics are really helpful specially for me as i am new to business. Our company is non vat. How many percent is an expanded withholding tax. does the EWT mean at the end of the day that we no longer have any unpaid tax for that transaction?
Thank you and more power.
Hi. Our company is registered as Non-VAT. Do we need to pay VAT for our construction services? then 1% withholding tax for goods and 5% for rentals? Thank you. Hoping for a reply. 🙂
good day!
our business is engaged in wholesale/retail of dressed chicken, non-vat.
1) how do we compute for the monthly percentage tax? we just get the dressed chicken from our suppliers and we put mark-ups only. our gross receipts will show the puhunan and a minimal amount for our profit. but if we will compute for the 3% percentage tax, nothing is left in the profit and also the puhunan is diminished.
pls. advise
Hi!
I registered as medical professional so I can have a cash receipt to issue for my professional fees. BIR told me that it should only be Non VAT. But I heard from one of the CPA who gave lecture during medical convention, doctors can charge VAT to patients asking receipts. How do I resolve this? Can you please clear my mind on this? I registered as medical professional, not a business estrablishment. Thank you! More power to you!
If I am a NON-VAT registered and purchase from a VAT-registered entity, can I intruct the supplier that the issued invoice or OR should be vat exclusive?
I belong to a Vat Registered Company engaging in manufacturing of Baked Good Products. We did not belong to Top 20000 Private Corporations, can we withhold 2% from Services or 1% from agri/ poultry products from our suppliers who are NON VAT registered?
Hi Maam, i just want to ask if is it ok to pay for 2550m even if what our COR indicates as percentage tax? Actually the gross receipt of the company meets the criteria of being a vat entity.Thanks for your help. Godbless
Hi MPM!
Thank goodness, this blog is really helpful!
I just have to clarify something. We’re NON-VAT registered company and some of our clients are members of PEZA so they’re saying that they are VAT Exempt-ed. May I know how do I issue the total invoice amount?
Say, the client should pay us Php32,000.00 and they presented us with the PEZA paper stating that VAT Exemp. What do I say to the client and how do I go about the total amount in billing?
Many thanks and Best Regards,
-Bebs
Is Manpower Agency is Vatable or Non-Vat? Thanks!
We finally found a website that contains troves of information on business tax. BIR website falls short of our expectation.
The apartments that we lease is NON-VAT. Last year, we renovated it for 900K and increased the rental accordingly. Can we use 100K of it as tax deductible?
Furthermore, can you please send me a resource where I can find the calculation formulae for entries in BIR Forms 2551M and 2551Q.
Thank you.
Good Day,
the main office is vat register do we need to register the branches as vat also? we are lending services
Hi. we are a travel consultant. ours is registered as non-vat. Lets say, the cost of the airline ticket is P50,000 from PAL and we only added a mark up of P500 as service fee. the clients demands a receipt. so we have to put P50,500. would this mean that we have to pay the 3% of P50,500 which is P1,515 but our only income from that sale is P500. What shall we do?
Hi,
We pay professional fees to diff. professionals (individuals) like engineers, architects, designers, technicians, etc. A Service Contract is being executed between us. Do we still require them to issue us Official Receipts?
If an entity states in their billing that it is VAT registered but no breakdown of Vatable sales & VAT indicated in the billing. Should it be considered non-vat? What’s the BIR ruling on this? Thank you
Hi,
Good Afternoon!!!
I have a company, and it is VAT as stated in the COR, i have a client that is NON-VAT, can my VAT payable be shouldered by my client? What is the proper computation for a VAT registered to compute the net amount?
Thank You
Hi Sir,
We are Non-Vat registered company. Then my client imposed 1% deduction for purchased items and 2% for installation and delivery.Is it possible?
Hi Sir! Our company is a sole-prop non-vat registered business, what if we exceed the annual sales cap for a non-vat business? How do we change our non-vat business to vat-registered one? Thank you.
Hi Jon, thanks for your question. You have to visit your BIR RDO and apply for update in your information (Tax Type) From NONVAT to VAT. The BIR Form you’ll use is BIR Form 1905. Then once BIR accepts your application, you will be issued a new Certificate of Registration (BOR) and you’ll be required to surrender your NONVAT Receipts and/or Invoices. and you need to apply again for a new ATP (Authority to Print) Receipts/Invoices to show your new VAT registration. Thank you
Hi,
What is the treatment in deducting the withholding tax expanded, if the lessee is non vat while the lessor is vatable? In our case, we deduct the withholding tax expanded based on the gross, example: 15,000 is our rent then 5% of 15,000 is the EWT, is this correct?Thanks
Hi Shami, thank you for your comment and question. If the lessor is NONVAT, there will be no input tax or VAT to be paid by the lessee. You’re doing it right. Regardless if VAT or NONVAT, the withholding tax rate is multiplied to the based rent (amount of rent without VAT). Thank you
Hi, I just want to ask. out company is VAT Registered, since the project will be under “non-vat” area, Clark to be specific, how are we going to file for the BIR or is there any document needed to declare a non vat transaction? I am confused.
as what I understood, 12% VAT is a requirement, right?. but my foreign boss wanted to know how about with this case. We are doing construction business. This is my first time to handle such office work. thank you for your time.
Hi Toshimie Tokura, thank you for leaving a comment. If the sale is to Economic Zone such as Clark or PEZA, you will put the amount of sales under the category of “Zero-Rated Sales” and no 12% VAT shall be collected from such sale. Then, when you file your BIR Form 2550 – Value Added Tax Return, put the amount of sales under “Zero-Rated Sales” and no output tax will be reflected. Thank you