VAT exemptions under Philippine TRAIN Tax Law


What are VATable and VAT-exempt items under the recently approved Tax Reform for Acceleration and Inclusion or TRAIN Law implemented starting 2018?

To recap, the TRAIN tax reform program includes various provisions that touch on reducing personal income taxes while increasing taxes on products such as sweetened beverages, oil, petroleum, and fuel products, coal, stock transactions, cars and automobiles, among others.

Also included in the tax reform is the updating of VAT-able products and transactions. The list of items that will or won’t be charged the 12% Value Added Tax (VAT) underwent several revisions in Congress in the last few months, but the final version is shown below.

We begin with a list of products or transactions that currently enjoy VAT exemption and will continue to be VAT-exempt under the new tax reform program.

* * * UPDATED resources on the approved TRAIN Tax Reform below:

Products, service, or groups that will continue to be VAT-exempt

  • Food and agricultural products
  • Senior citizens
  • Persons with Disability (PWD)
  • Cooperatives
  • Tourism
  • Education
  • Renewable energy
  • Health
  • Enterprises and BPOs located in Special Economic Zones
  • Condominium association dues
  • Rentals and leases below P15,000 per month

The following items, meanwhile, will now also enjoy the benefit of not paying VAT.

Groups, products, or transactions that will be VAT-exempt

  • Businesses with annual gross sales of P3 million and below
  • Government owned and controlled corporations (GOCCs), state universities and colleges (SUC), and government agencies
  • Medicines for diabetes, cholesterol, and hypertension (VAT exemption beginning 2019)
  • Socialized housing, or houses priced at P450,000 and below, and low-cost housing, or those priced at P3 million and below (VAT exemption retained from 2018 to 2020 only)

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37 thoughts on “VAT exemptions under Philippine TRAIN Tax Law”

  1. Hello, good day!

    Ano pong pagkakaiba ng CUSA (Common Use of Service Area) at Association Dues? Based on above discussions, condominium association dues are VAT-exempt. What about CUSA? Is there a case na VAT-exempt din po ito?
    Our lessor charged VAT on CUSA that is being billed to us.\

    Thank you very much.

  2. Hi Good Morning,

    I have read from the trail of queries above that sale of a condo unit worth P3.0Million and above is Vatable. Is this applicable to all sellers, whether individual or corporation? How much is the VAT on a condo sale in excess of P3.0Million and Is this on top of the Capital Gains Tax of 6% of the sale? May I request for a computation of the VAT and Capital Gains Tax on a Condo Unit for sale in the amount of say P6,000,000.00.

    Thank you and regards,

    Jess D. gomez

  3. Aileen de Guzman

    Hi, good day!

    In a service company, where clients have offices based abroad, if payment is made by their Philippines office, they are subject to VAT. If the payment is processed or made by their foreign counterpart, it becomes VAT-exempt. Why is this so? What particular BIR ruling is it?

    Appreciate your prompt reply. Thanks!

  4. hello po! sir tanong ko lang po kung subject po kami sa VAT (12%) nagre rent po office namin meron po kaming 4 units na inuupahan Php18K each total of Php72K a month po bale annually po total of Php864,000.00 payment namin kmi rin pong lessee ang nagso shoulder ng EWT bale net of tax po ung binabayaran namin. Tama po na na IVat po kami ng lessor namin though hindi po kami umabot sa Php3M threshold na payment po. salamat po ng marami.

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