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VAT exemptions under new Philippine Tax Reform (2018)

What are VAT-able and VAT-exempt items under the recently approved Tax Reform for Acceleration and Inclusion (TRAIN) law implemented beginning January 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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9 thoughts on “VAT exemptions under new Philippine Tax Reform (2018)”

  1. Vincent crist says:

    Are those working in the BPO industiries earning less than 21k a month included in reform?

  2. daphne obligar says:

    Are professionals like doctor and lawyers earning > 3 Million subjwct yo Vat?

  3. Esmeralda Fadul says:

    Are condominium association fees vat-exempt? Why do Cityland condominiums admin charge condominium owners/tenants 12% vat ?

  4. Chinggay says:

    Hi. Ask ko lang po if anong section ng TRAIN law yung nag-indicate na VAT exempt na ang mga GOCCs? Salamat po.

  5. bert says:

    i am a job order of cebu province nurse 1, our annual income does not even reach 250,000php. but we are still taxed 5% because we are considered professionals not only our income but our philhealth sharing was also taxed
    . I hope i would get reply on this matter, and possible on what basis we are taxed. hope my concern will be answered.

  6. Angel says:

    Ask ko lang po PWD ako working in BPO wala po bang tax sa train law ang PWD? KAse may tax ako kinakaltas sa sweldo ko

  7. diana pacis says:

    Hi, how can i compute the amount of vat payable on the ff: transactions
    GA – 15,000 inclusive of vat (sales)
    Private – 8,500.00 inclusive of vat (services)
    Purchases – for GA only – 10,980 inclusive of vat
    Purchases – common – 5,350.50 inclusive of vat
    W/h tax by GA – 1% = 133.93
    Final tax by GA – 5% = 669.64

    Hope to hear from you.

    1. diana pacis says:

      bakit walang nagrereply sa mga comments?

  8. Adel Delgado says:

    How about Vat exemptions for motor vehicles used in PEZA? Are they still Vat exempt? Thanks

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