VAT exemptions under Philippine TRAIN Tax Law

Pinoy Money Talk

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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Pinoy Money Talk is an educational website about money, banking, investments, and personal finance which started in 2005. Its group of five writers consists of one equity research analyst, one fintech startup owner, one finance educator, and two investment professionals.