Philippines Value Added Tax/ Sales Tax BEST Facts

Philippines Value Added Tax/ Sales Tax

A 12% value added tax (VAT) of the gross selling price is imposed to all importation, sale,
barter, exchange or lease of goods or properties and sale of services.
The term 'Gross selling price' means the total amount of money or its equivalent that the
purchaser pays or is obligated to pay to the seller in consideration of the sale, barter or
exchange of the goods or properties, excluding the value added tax.




Tax Incentives for SMEs
1. Direct Tax
Tax incentive for importers and exporters
- Tax credits are available for taxes and duties paid on purchases of raw materials of
products for export, domestic capital equipment, domestic breeding stock and
genetic materials.
- A tax credit of 25% of the duties paid on raw materials and capital equipment
and/or spare parts.
Tax incentives also available to enterprises registered with the Philippine Economic
Zone Authority (PEZA). These incentives are shown below:
- 4 to 8 years income tax holiday. A 5% tax on the modified gross income is
imposed after the end of the income tax holiday.
- Tax and duty exemption on imported capital equipment and raw materials.
- National and local tax exemption.
- Tax rebate for the purchase of domestic capital good.


2. Indirect Tax
Under the Investment Priority Plan (IPP), SME owners shall be eligible for the
following incentives.
- An exemption from wharfage dues and export tax, duty import and fees.
- Additional deduction for labor expense (ADLE).
- Additional deduction for necessary and major infrastructure works.
Excise tax on exported goods produced or manufactured locally can be credited or
refunded upon submission of the proof of actual exportation and upon receipt of the
corresponding