Article 46p. 46

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

employment, wearing apparel, domestic animals,

and personal and household effects belonging to

persons

coming

to settle in the Philippines or

Filipinos or their families and descendants who are

now residents or citizens of other countries, such

parties hereinafter referred to as overseas Filipinos,

in

quantities

and

of

the

class

suitable

to the

profession, rank or position of the persons importing

said items, for their own use and not for barter or

sale, accompanying such persons, or arriving within

a reasonable time: Provided, That the Bureau of

Customs may, upon the production of satisfactory

evidence that such persons are actually coming to

settle in the Philippines and that the goods are

brought from their former place of abode, exempt

such goods from payment of duties and taxes:

Provided, further, That vehicles, vessels, aircrafts,

machineries and other similar goods for use in

manufacture, shall not fall within this classification

and shall therefore be subject to duties, taxes and

other charges;

(E) Services subject to percentage tax under Title V;

(F) Services by agricultural contract growers and

milling for others of palay into rice, corn into grits

and sugar cane into raw sugar;

(G) Medical, dental, hospital and veterinary services

except those rendered by professionals;

(H)

Educational

services

rendered

by

private

educational

institutions,

duly

accredited

by

the

Department of Education (DepEd), the Commission

on

Higher

Education

(CHED),

the

Technical

Education

and

Skills

Development

Authority

(TESDA)

and

those

rendered

by

government

educational institutions;

(I) Services rendered by individuals pursuant to an

employer-employee relationship;

(J)

Services

rendered

by

regional

or

area

headquarters

established

in

the

Philippines

by

multinational corporations which act as supervisory,

communications and coordinating centers for their

affiliates, subsidiaries or branches in the Asia-Pacific

Region and do not earn or derive income from the

Philippines;

(K)

Transactions

which

are

exempt

under

international agreements to which the Philippines is

a signatory or under special laws, except those

under Presidential Decree No. 529;

(L) Sales by agricultural cooperatives duly registered

with

the Cooperative Development Authority to

their members as well as sale of their produce,

whether in its original state or processed form, to

non-members;

their

importation

of

direct

farm

inputs, machineries and equipment, including spare

parts thereof, to be used directly and exclusively in

the production and/or processing of their produce;

(M) Gross receipts from lending activities by credit or

multi-purpose cooperatives duly registered with the

Cooperative Development Authority;

(N)

Sales

by

non-agricultural,

non-electric

and

non-credit cooperatives duly registered with the

Cooperative Development Authority: Provided, That

the share capital contribution of each member does

not exceed Fifteen thousand pesos (P15,000) and

regardless of the aggregate capital and net surplus

ratably distributed among the members;

(O)

Export

sales

by

persons

who

are

not

VAT-registered;

(P) Sale of real properties not primarily held for sale

to customers or held for lease in the ordinary course

of trade or business or real property utilized for

low-cost

and

socialized

housing

as

defined

by

Republic Act No. 7279, otherwise known as the

Urban Development and Housing Act of 1992, and

other related laws, residential lot valued at One

million five hundred thousand pesos (P1,500,000)

and below, house and lot, and other residential

dwellings

valued

at

Two

million

five

hundred

thousand pesos (P2,500,000) and below: Provided,

That beginning January 1, 2021, the VAT exemption

shall

only

apply

to

sale

of

real properties not

primarily held for sale to customers or held for lease

in the ordinary course of trade or business, sale of

real

property

utilized

for

socialized

housing

as

defined by Republic Act No. 7279, sale of house and

lot, and other residential dwellings with selling price

of not more than Two million pesos (P2,000,000):

Provided,

further,

That

every

three

(3)

years

thereafter,

the

amount

herein

stated

shall

be

adjusted to its present value using the Consumer

Price Index, as published by the Philippine Statistics

Authority (PSA);

(Q) Lease of a residential unit with a monthly rental

not exceeding Fifteen thousand pesos (P15,000);

(R)

Sale,

importation, printing or publication of

books and any newspaper, magazine, review or

bulletin which appears at regular intervals with fixed

prices or subscription and sale and which is not

devoted

principally

to

the

publication

of

paid

advertisements;

(S) Transport of passengers by international carriers;

(T) Sale, importation or lease of passenger or cargo

vessels and aircraft, including engine, equipment

and spare parts thereof for domestic or international

transport operations;

(U)

Importation of fuel, goods and supplies by

persons engaged in international shipping or air

transport operations: Provided, That the fuel, goods,

and supplies shall be used for international shipping

or air transport operations;

(V)

Services

of

bank,

non-bank

financial

intermediaries performing quasi-banking functions,

and other non-bank financial intermediaries;

(W) Sale or lease of goods and services to senior

citizens and persons with disability, as provided

under Republic Act Nos. 9994 (Expanded Senior

Citizens Act of 2010) and 10754 (An Act Expanding

the

Benefits

and

Privileges

of

Persons

with

Disability), respectively;

(X) Transfer of property pursuant to Section 40(C)(2)

of the NIRC, as amended;

(Y) Association dues, membership fees, and other

assessments and charges collected by homeowners

associations and condominium corporations;

(Z) Sale of gold to the Bangko Sentral ng Pilipinas

(BSP);

(AA) Sale of drugs and medicines prescribed for

diabetes,

high

cholesterol,

and

hypertension

beginning January 1, 2019; and

(BB) Sale or lease of goods or properties or the

performance of services other than the transactions

mentioned in the preceding paragraphs, the gross

annual sales and/or receipts do not exceed the

amount of Three million pesos (P3,000,000).

(as amended by RA No 10963)

(2) A VAT-registered person may elect that Subsection (1)

not apply to its sale of goods or properties or services:

Provided, that an election made under this subsection

shall be irrevocable for a period of three (3) years from the

quarter the election was made. [64]

SEC. 110. Tax Credits. -

A. Creditable Input Tax. -

(1)

Any input tax evidenced by a VAT invoice or

official receipt issued in accordance with Section 113

hereof

on

the

following

transactions

shall

be

creditable against the output tax:

(a) Purchase or importation of goods:

© Compiled by RGL

46 of 201