VAT Philippines 2026: Rates, Zero-Rated Sales and Registration
Value-added tax (VAT) is a 12% tax on sales of goods and services. You charge it to your customer and pay the BIR the difference between the VAT you charged and the VAT you paid on your own purchases. Use the calculator to estimate it: pick a graduated self-employed method, then choose a VAT option.
VAT treatments
| Treatment | Output VAT | Input VAT | Applies to |
|---|---|---|---|
| 12% VAT (standard) | 12% of sales | Creditable | Most local sales of goods and services, and imports |
| Zero-rated (0%) | 0% | Creditable; excess may be credited or refunded | Export sales, and qualifying services to a non-resident client doing business outside the Philippines, paid in acceptable foreign currency |
| VAT-exempt | None | Not creditable | Transactions listed in Section 109 of the Tax Code, such as unprocessed agricultural food products, educational and medical services |
| Not registered | None | Not claimable | Gross receipts up to ₱3,000,000; 3% percentage tax or the 8% option applies |
Zero-rated and VAT-exempt both mean no VAT charged to the customer. The difference is that a zero-rated seller can still recover input VAT, while a VAT-exempt seller cannot.
Who must register for VAT
| Situation | Rule |
|---|---|
| Gross sales or receipts above ₱3,000,000 in any 12-month period | VAT registration is mandatory. Register within 30 days after the end of the month in which you passed the threshold. |
| Gross sales or receipts of ₱3,000,000 or less | Not required. You may register voluntarily, but you generally cannot switch back to non-VAT right away. |
| 8% flat income tax option | Not available to VAT-registered taxpayers. |
| Percentage tax (3%) | Not paid by VAT-registered taxpayers. VAT replaces it. |
Formulas
Output VAT = Sales (excluding VAT) × 12% (0% if zero-rated)
Invoice total = Sales + Output VAT
Input VAT = VAT paid on purchases, supported by valid VAT invoices
VAT payable = Output VAT − Input VAT
(negative: carried over; zero-rated sellers may claim a credit or refund)
Example, 12% VAT: sales ₱100,000, input VAT ₱3,000
Output VAT = ₱12,000 Invoice total = ₱112,000 VAT payable = ₱9,000
Example, zero-rated: sales ₱100,000, input VAT ₱3,000
Output VAT = ₱0 Invoice total = ₱100,000 VAT payable = −₱3,000 (creditable or refundable)
VAT is not your income. The calculator treats your income as sales excluding VAT, computes income tax on that amount, and shows VAT separately.
VAT vs percentage tax
| Not VAT-registered | VAT-registered | |
|---|---|---|
| Business tax | 3% percentage tax, or 8% flat option replacing it and income tax | 12% VAT (or 0% if zero-rated) |
| Quarterly return | 2551Q (percentage tax) | 2550Q (VAT) |
| Input VAT on purchases | Part of your cost; cannot be claimed | Credited against output VAT |
| 8% flat option | Available up to ₱3,000,000 | Not available |
Income tax is separate from both. VAT-registered taxpayers still file income tax returns on the graduated rates; see the BIR.
VAT filing deadlines (Form 2550Q)
VAT is filed and paid quarterly, no later than the 25th day after the quarter ends. Regular taxpayers do not file a monthly VAT return.
| Quarter | Period | 2550Q due |
|---|---|---|
| Q1 | January – March | April 25 |
| Q2 | April – June | July 25 |
| Q3 | July – September | October 25 |
| Q4 | October – December | January 25 (next year) |
Zero-rating conditions for services
For a service to be zero-rated it generally must be performed in the Philippines, be rendered to a person doing business outside the Philippines, and be paid in acceptable foreign currency accounted for under Bangko Sentral ng Pilipinas rules. Keep your contract, invoice and proof of payment. Without them the BIR can treat the sale as regular 12% VAT.
Digital services
Under RA 12023, non-resident digital service providers must charge 12% VAT on digital services consumed in the Philippines. This is separate from the rules for local freelancers and businesses above.
Rules and deadlines can change. Confirm with the BIR (bir.gov.ph) or an accountant before registering or filing. This page is for information only.