SBA TAX LAST MINUTE REVIEWER

ESTATE TAX
Inter vivos- donor’s tax
Estate tax- mortis causa

REQUISITES FOR IMPOSITION OF ESTATE TAX

1. Death of decedent
2. Successor is alive at the time of decedent’s death
3. Successor is not disqualified to inherit

When accrued: Time of death

Measure of gross estate: Value of the estate at the time of the decedent’s death regardless of any postponement of
actual possessor or any subsequent increase or decrease in value
On whom: Natural persons only

Disclosure on properties outside

For RC: Yes so as to know what properties to tax
For NRA: to avail of the allowable deductions
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Shares issued by a foreign corporation may be included in the estate for the computation of excise tax if:
1. 85% of the business of the FC who issued the stocks is locaed in the PH or
2. FC has obtained business situs in the Ph

Kind of property PROPERTY VALUATION

Real property 1. FMV that appears in the latest tax declaration
2. Zonal value; whichever is higher

Real property where there is an Value of improvement is the construction cost pero building permit or FMV per
improvement latest tax dec
Personal property Appraised at FMV
Shares of stocks Unlisted Listed
Common Preferred Closing rate at the time of death. If
none is available, the FMV is the
arithmetic mean between the highest
and lowest quotation at a date
nearest the date of death
Book value Par value

(do not consider

the following:
1. Appraisal
surplus
2. The
value
assigned
to
preferred
share, if
there is
any)
Right to usufruct, use or Take into account the probable life of the beneficiary in accordance with the
habitation as well as that of latest basic standard mortality table, to be
annuity

WHAT IS INCLUDED (DTRG

Decedent’s interest 1. Equity or ownership participation of the decedent
on any property physically existing and present in
the gross WON possession, control, or dominion.
2. Fruits transferred by the decedent at his death
3. Rental income from buildings
4. Dividends from investments
5. Interest on bank deposits which accrued at the
time of his death
6. Interest in the partnership

Transfers in contemplation of death 1. (LITERAL) Decedent has, at any time, made a

transfer in contemplation of or intended to take
effect in possession or enjoyment at or after
death; or
2. (transfer of ownership which would take
effect only after death) Decedent has made a
transfer to someone but he has retained for his
life or for a period not ascertainable without
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reference to his death the ff:

a. Possession, enjoyment or right to income
from the property
b. Right to designated with any other person
who will possess or enjoy the property or
income therefrom

XPN: Transfer is a sale for an adequate and full

consideration in money or money’s worth.

Circumstances to consider
1. Age
2. Health
3. IntervaL between the transfer and the death
4. Amount of property transferred
5. Nature and disposition of the decedent
6. Relationship of the donees to the decedent
7. Existence of a desire on the party of the decedent
to escape the burden of managing property by
transferring
8. Existence of a long-established gift-making policy
9. Concurrent making of will or making a will within
a short time after the transfer
Revocable transfer Transfer by trust or otherwise, where the enjoyment
thereof was subject at the date of his death to any
thorugh the exercise of a power to alter or amend or
revoked such transfer by:
1. Decedent alone
2. By the decedent in conjunction with any person to
alter, amend, revoke or terminate; or
3. Where any such power is relinquished in
contemplation of the decedent’s death other than
a bona fide sale for an adequate and full
consideration in money or money’s worth.
As long as the nature is revocable, regardless if the
decedent actually exercised the revocation at the time of
death, part sya sa gross estate.

Look at the element of control

Not part of the gross estate
1. Decedent’s power could only be exercised with
the consent of all parties having an interest
in the transferred property and if the power
adds nothing to the rights the parties
possess under local law
2. When the decedent has been completely
divested of the power at the time of his
death
3. When the exercise of the power by the
decedent was subject to a contingency
beyond the decedent’s control which did
not occur before his death
4. The mere right to name trustees.
When in the deed of donation, the donor has retained for
his life or for any period which does not in fact end before
his death the possession or enjoyment or or right to the
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income or property
Property under General Power of appointment The right to designate by will or deed, without
restrictions, the persons who shall succeed to the property
of the prior decedent.
If the power of appointment is specific (only to a
specific person), such property should not be included
in the decedent’s gross estate.
Proceeds of life insurance 1. Estate, ER/AR taken out by the decedent
upon his own life regardless of whether the
designation is irrevocable or irrevocable OR
2. Revocable designation of third persons
NOT PART OF THE GROSS ESTATE
1. Proceeds of a group insurance policy taken
out by a company for its EEs
2. Proceeds of insurance policies issued by the
GSIS
3. Benefits accruing from SSS law
4. Proceeds of life insurance payable to heirs
of deceased members of military personnel
Prior interests Before During marriage During marriage
marriage but the but the
beneficiary is beneficiary is
the estate third person
Source of funds Proceeds deemed Proceeds are
determines conjugal payable to
ownership beneficiary even in
½ share of the premiums were
suriving spouse paid out of the
shall not be taxed conjugal funds.
Beneficiary’s interest in the insurance policy is forfeited if
he was the principal, accomplice or accessory in willfully
bringing about the death of the insured.
 Goes to the other beneficiaries, if there are any
 If none, goes to the estate
If ER takes an insurance policy for the EE where the ER is
the beneficiaryproceeds will form part of the EE’s gross
estate if the designation is REVOCABLE.
Transfers for insufficient consideration ONLY THE EXCESS OF THE FMV AT THE TIME OF
DEATH OVER THE CONSIDERATION SHALL BE INCLUDED
IN THE GROSS ESTATE
Subject to estate tax Subject to donor’s tax
1. Transfers in Other kind of transfers
contemplation of
death
2. Revocable transfers
3. Transfers under GPA
Share of the surviving spouse ACG CPG
1. Property acquired 1. Brought to the
during the marriage marriage as their
by gratuitious title own
by either spouses 2. Acquired during
and the fruits plus the marriage by
the income thereof if grat title
any (unless it si 3. Acquired by right
expressly provided of redemption, by
by the donor, R or barter or by
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grantor that they exchange with

shall form part of poeprty belning to
the community only one spouse
property) Purchased with exclusive
2. Property for the money of the wife or
personal or husband
exclusive use of
eithr space
3. Property acquired
before the marriage
by either spouses
who has leigitmate
descendants by a
foremer marriage
(plus the fruits and
income)

DEDUCTIONS
ORDINARY DEDUCTIONS
Expenses, losses, indebtedness, taxes, etc.
Claims against the estate REQUISITES By RC NRC or RA provided Must follow the
that: date-of-death
1. Must be a personal 1. The debt valuation rule
obligation of the instrument was (claims existing at
deceased existing at notarized the time of death
the time of his death 2. If the loan was should be the basis
2. Liability was contracted within of the allowable
contracted in GF and 3 years before the deductions)
for adequate and full death of the
consideration in decedent, the
money or money’s AR/ER shall submit
worth a statement
3. Must be valid and showing the
enforceable in court disposition of the
4. Indebtedness not proceeds of the
condoned by the CR or loan
the action to collect
must not have
prescribed
5. Must be duly
substantiated
NOT INCLUDED Liability ni deceased
1. Unpaid taxes such as at the time of death.
income and real
2. Unpaid funeral
expenses and
3. unpaid medical
expenses
Claims against insolvent REQUISIITES Asset of decedent
persons (receivable from
1. Full amount of the another person)
receivables be
included first in the Para maclaim sya as
gross estate deduction, the same
2. Incapacity of the should be included
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debtors to pay their in the GE.

obligation is proven
and not merely The net effect is
alleged. zero pero you
cannot offset.
No need of judicial
declaration of insolvency
Unpaid mortgage or REQUISITES If the loan is for
indebtedness on property accommodation for
1. Value of the property another person, the
to the extent of the value of the unpaid
decedent’s interest loan, to the extent
therein, undiminished of the decedent’
by such mortgage or interest therein
indebtedness is must be included as
included in the gross a reciveable fo the
estate estate.
2. Mortgage
indebtedness was
contracted in good
faith and for an
adequate and full
consideration in
money or money’s
worth
Where the decedent
owned only ½ of
the property
mortgaged so that
only ½ of its value
was included in his
estate, only 1.2 of
the mortgage debt
was deductible,
even though the ER
paid the entire debt.

(muclaim lang sya

sa co-mortgagor in
a separate action)
Taxes REQUISITES

1. Taxes which have

accrued as of or before
the death of the
decedent
2. Unpaid as of the time
of his death
NOT DEDUCTIBLE

1. Income tax on income

received after death
2. Property tax not
accrued before death
3. Estate tax due from
the transmission of his
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estate
Losses
For RC, NRC, RA For NRA
(Casualty losses)
1. Incurred during the
settlement of the
estate
2. Arise from fire, storm,
shipwreck, or other
casualties or form
robbery, theft, or
embezzlement
3. Not compensable
4. Not claimed as
deduction from income
tax
5. Incurred not later than
the last day or any
extension thereof for
payment of the estate
tax
Vanishing deduction REQUISITES PERIOD DEDUCTION At least transfer

1. Present decedent died 1 d to 1 y 100% 1. First

within 5 years from 1 y and 1 80% transfer:
receipt of property d to 2 y donation or
from a prior decedent by
or donor 2 years 60% succession
2. Property formed part and 1 d to 2. Second
of the gross estate 3 years transfer: by
situated in the PH of 3 years 40% death.
the prior decedent or and 1 d to (where u
was a taxable gift of 4 years can claim
the donor 4 years 20% the
3. Estate tax on the prior and 1 to 5 vanishing
succession or donor’s years deduction)
tax must have been
More than No deductions
paid
5 years allowed
4. Property must be
identified as the one
received or acquired
5. No vanishing
deduction was allowed
on the same property
on the prior decedent’s
estate.
Transfer for public use REQUISITES For NRA the property
transferred must be
1. Disposition is in a last located within the PH and
will and testament included in the gross
2. Take effect after death estate.
3. In favor of the
government of the PH
or any political
subdivision thereof
4. For exclusive public
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purposes and
5. Value of the property
is included in the gross
estate
SPECIAL DEDUCTIONS
Family Home REQUISITES NRA decedents are not If the FMV of the
allowed to avail family home is less
1. Family home must be than 10 m, then
the actual residential deduct the actual
home of the decedent value.
and his family at the
time of his death, as If the FMV is 15m,
certified by the brgy only deduct 10m.
captain of the locality
where the family home
is situated
2. Total value of the
family home must be
included as part of the
gross estate
3. Allowable deduction
must be in the amount
equivalent to:

a. Current FMV of the

family home as
declared or included in
the gross estate or
b. Extent of the
decedent’s interest
whichever is lower

4. The deduction does

not exceed 10M pesos.
Standard deduction For RC, NRC, and RA For NRA

Fixed at the full amount of  Fixed at 500k

5M  No need of
 No need of substantiation substantiation
Amount received by heir REQUISITES
under RA 4917
1. Amount received by
heirs from decedent’s
employer
2. Received as a
consequence of death
of the decedent-
employee and
3. Amount is included in
the gross estate of the
decedent.

EXCLUSIONS FROM GROSS ESTATE

Exclusive property of the surviving Merger of the usufruct in the owner Benefits received by members from
spouse of the naked title the GSIS and SSS by reason of death
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Property outside Philippines of NRA Transmission or the delivery of the Amounts received from the PH and
decedent inheritance or legacy by the fiduciary US govts for damages suffered during
heir or legatee to the fideicommissary the last war
Intangible personal property in the PH Transmission from the first heir, LEE, Benefits received by beneficiaries
of NRA decedent provided there is or, DD in favor of another beneficiary residing in the Ph under the law
reciprocity in accordance with the desire of the dminsitered by the US veterans
predecessor Admin
All the bequests, devises, legacies or Grants and donations ot the
transfers to social welfare, cultural Intramuros Admin
and charitable institutions, provided
no part of the net income of which
inures to the benefit of any individual
of which inures to the benefit of an
individual and that not more than
30% of the value given is used for
admin purposes.

DONOR’S TAX
REQUISITE OF A VALID DONATION
1. Capacity to donate
2. Donative intent
3. Actual or constructive delivery of gift (the subject matter must be within the dominion and control of the done)
4. Acceptance by the done
5. Form prescribed by law
a. RPwriting
b. PP exceeding 5kwriting
c. PP below 5ksimultaneous delivery and oral contract

VERY IMPORTANT: A transfer is taxable when the property is accepted by the done (the donor has diversted himself of
all beneficial interests in the property transferred and has no power to recover any such interest in himself or his estate)

TRANSFERS SUBJECT TO DONOR’S TAX

Transfer of ownership or transfer of
any right or interest in property but
less than title
Renunciation of the spouse in her
share of the conjugal property in
favor of the heirs of the deceased
spouse
Specific renunciation of share by heirs The specific renunciation must be
to co-heir or another person made to the exclusion of other heirs
Transfer of any right or interests
Donations made by a corporation to The past services must be rendered
its decased officer out of gratitude for without relying on a promise, express
past services are subject to donor’s or implied, that such services would be
tax. paid for in the future.
Transfer for less than adequate and GR: XPN: (FMV – selling price)
full consideration 1. Where the sale,
Where a property is transferred exchange or transfer
for less than adequate and full is made in the
consideration in money or ordinary course of
money’s worth, the amount by business which is:
which the FMV exceeds the a. Bona fide
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consideration shall be deemed a b. Made at arm’s

gift and be included in computing length
the amount of gifts made during c. Free from any
the calendar year. It is as if the donative intent
property was donated but in order
to avoid paying donor’s tax, the
donor opted to transfer the 2. Where property
property for inadequate transferred is real
consideration. property located in
the Philippines
PhilAmGen case considered as
capital asset, the
The absence of donative intent, if transfer is not
that be the case, does not exempt subject to donor’s
the sales of stock transaction tax but to a capital
from donor's tax since Sec. 100 of gains tax.
the NIRC categorically states that
the amount by which the fair
market value of the property
exceeded the value of the
consideration shall be deemed a
gift. Thus, even if there is no
actual donation, the difference in
price is considered a donation by
fiction of law.
Condonation or remission of debt Only if the creditor condones the
indebtedness of the debtor and not
services were rendered by the debtor.
If the condonation was based on a
curt action which approved and
implemented a debt rehabilitation,
then there can be no imposition of
donor’s tax.
If the debtor of a person indebted to
another pays the former’s debt to the
latter, that indirect donation is subject
to donor’s tax.

TRANSFER NOT DEEMED AS DONATIONS

Transfer of stocks in a corp organized as a
mutual benefit association to its members
which transfer is merely a conversion of
the owner-member contributions to shares
of stocks is not subject to CGT
Transfer of property from a non-stock,
non-profit community association to its
members-beneficiaries, who actually
bought the property, is not subject to
donor’s tax since the transfer, while
without consideration, is a mere formality
to finally effect the transfer of said
property to its real owners.
Spouses established a revocable inter vivos
trust which holds title to all the spouses’
real properties, shares of stock and
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securities. The transfer fo title involves no

actual transfer of ownership
Transfer of CP in favor of the children
pursuant to court order arising from the
declaration of nullity of marriage of the
parents is not subject to donor’s tax
because there is no donative intent since
the transfer is only in compliance with the
court order.
Onerous donations GR: No XPN:
1. Where the transfer is
for less than an
adequate and full
consideration in money
or money’s worth; or
2. The gift imposes upon
the done a burden
which is less than the
value of the hiring
given.

PROPERTY VALUATION

Kind of property PROPERTY VALUATION

Real property 1. FMV that appears in the latest tax declaration
2. Zonal value at the time of gift; whichever is higher

Real property where there is an Value of improvement is the construction cost pero building permit or FMV per
improvement latest tax dec
Personal property Appraised at FMV at the time of the gift
Shares of stocks Unlisted Listed
Common Preferred Closing rate at the time of death. If
none is available, the FMV is the
arithmetic mean between the highest
and lowest quotation at a date
nearest the date of death
Book value Par value

(do not consider

the following:
3. Appraisal
surplus
4. The
value
assigned
to
preferred
share, if
there is
any)

EXEMPTION OF CERTAIN GIFTS

Kinds of donations Requisites
Donations for political campaigns REQUISITES
SBA TAX LAST MINUTE REVIEWER

1. Donations should be duly

reported to the COMELEC
though submission of a
Statement of Contributions
and Expenditure
2. Contributions must be utilized
during the campaign period
only.
If the contributions are utilized BEFORE
AND AFTER THE CAMPAIGN PERIODnot
exempt.

If not utilized during the campaign

periodexcess be considered as income
tax.
Certain gifts made by residents
Net gifts of the amount 250k or
less
Gifts made to or for the use of
the NatGov or any entity created
by any of its agencies which is
not conducted for profit or to any
polsubdivision of the said Govt
Gifts in favor of (CARTER-CuPS) REQUISITES
1. Charitable
2. accredited NGOS 1. Donee is incorporated as a
3. religious non-stock, non-profit entity,
4. trust foundations paying no dividends
5. educational institutions 2. Governed by trustees
6. research institutions 3. Trustees received no
7. cultural foundations compensation
8. philantrophic orgs 4. Donee devotes all its income,
9. social welfare whether students’ fees or
corporations gifts or donation subsidies or
other forms of philanthropy to
the accomplishment and
promotion of the purposes
enumerated int eh AOI and
5. Not more than 30% of the
donation is used for admin
purposes
An alumni association is not an education
or research organization, corporation,
institution, foundation or trust.
Donations of intangibles subject 1. Donor at the time of the donation
to reciprocity was a citizen and resident of an
FC which at the time fo donation
did not impose a transfer tax of
any character
2. If the law of the FC of which the
donor was a citizen and resident
at the time of the donation allows
a similar exemption from transfer
of every character or description
in respect of intangible personal
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property owned by citizens of the

PH not residing in that FC.
Donations for athlete’s prizes REQUISITIES
and awards
1. Donation must be prizes and
awards given to athletes in
local and international
tournaments and
competitions
2. Held in the PH or abroad; and
3. Sanctioned by their respective
sports association
Donation under the adopt-a- REQUISITES
school program
1. Any aid, help, contribution or
donation
2. Provided by an adopting
private entity to a
government school, whether
elem, HS or tertiraru
3. Assistance in the form of
infra, teaching, skilsl
development, learning,
sports, computer, science lab,
food and nutrition.
Exemption under other special Examples:
laws
1. all donations of personal
computers, laptops, tablets, or
similar equipment (i.e. mobile
phone, printer) for use in teaching
and learning in public schools

VALUE-ADDED TAX
Bayad rakag VAT if ur gross receipts or sales exceed the 3m threshold. If dili, ayawg bayad VAT pero bayad kag
percentage tax.

GR: Destination principle

XPN:
1. Service performed in the PH, paid for in acceptable foreign currency and accounted for in accordance with the
rules of BSP
2. Purchases of goods and services destined for consumption within an ECOZONE. No input VAT should be paid. (di
mucharge ug output VAT ang seller)

Jurisprudence
All sales of goods, properties, and services made by a VAT registered supplier from Customs Territory to an ecozone
enterprise shall be subject to VAT, at zero percent rate, regardless of the latter’s type or class of PEZA registration.
SBA TAX LAST MINUTE REVIEWER

KEY POINTS

1. Basta below P3,199,200 ang RESIDENTIAL HOUSE AND LOT nya seller is a REDVAT EXEMPT

SALE OF REAL PROPERTIES

VATABLE NOT VATABLE
Those held for sale to customers in the ordinary Sale of real properties not primarily held for sale to
course of trade or business; customers or held for lease in the ordinary course
of trade or business;

Those held for lease in the ordinary course of trade Sale of real property utilized for socialized housing as
or business; and defined under R.A. 7279;

Those used in the trade or business of the seller (as Sale of house and lot, and other residential
it is incidental to the taxpayer's main business) dwellings with selling price of not more than P2,000,000
(to be adjusted every 3 years depending on the Consumer
Price Index).

Meaning of residential units:

Apartments and houses and lots used for residential purposes, and buildings or parts or units thereof used solely as
dwelling places (e.g., dorms, rooms, and bed spaces) except motels, motel rooms, hotels, and hotel rooms,
lodging houses, inns, and pension houses.

Sale of adjacent residential lots

1. Sale and transfer or disposal made within a 12-month period;
2. Of two or more adjacent residential lots, house and lots or other residential dwellings;
3. In favor of one buyer;
4. From the same seller;
5. For the purpose of utilizing the lots, house and lots or other residential dwellings as one residential area.
SBA TAX LAST MINUTE REVIEWER

SO KUNG SALE OF ADJACENT LOTS WILL BE COMPUTED AS ONE IN DETERMINING WHETEHR THE 3M
THRESHOLD HAS BEEN MET.

NOTE: WAY APIL ANG SALE OF PARKING LOT SA PAGCOUNT SA THRESHOLD AMOUNT.

SALES VIA INSTALLMENT Definition When does the VAT Vatability of

(THEY ARE VATABLE) liability accrue? subsequent payment
Sale of real property on Initial payment does not only the initial Subject to VAT
installment plan exceed 25% of the gross payments shall be
selling price vatable during the year of
sale.

(you can claim the output

tax based on the initial
payment actually or
constructively received)
Deferred Initial payment exceeds total gross selling price No longer subject to
25% of the gross selling shall be subject to VAT VAT
price during the year of sale.

(you can claim the output

tax on the same year)

Note: Initial payments include not only the downpayment but also the subsequent payments during the year
of sale, when the property was sold.

VATABLE TRANSACTIONS
SALE OF PROPERTIES
Sale of real properties Those held for sale to
customers in the ordinary
course of trade or business;
Those held for lease in the Lease of commercial
ordinary course of trade or units, regardless of the
business; and amount of monthly rental is
subject to VAT unless the
lessor is non-VAT registered
and annual gross receipts is
< or equal to 3m
Those used in the trade or
business of the seller (as it is
incidental to the taxpayer's main
business)
Sale or exchange of 1. Construction and service
services in the course of REQUISITES contractors;
trade or business 2.   Stock, real estate,
1. There is a sale or commercial, customs and
exchange of service or immigration brokers;
lease or use of 3.   Lessors of property,
property enumerated whether real or personal;
in the law or other 4.   Warehousing
similar services services;
2. The service is 5.   Lessors or
performed or to be distributors of
performed in the cinematographic films;
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Philippines, and in 6.   Persons engaged in

case of lease, property milling, processing,
leased or used must manufacturing, or repacking
be located in the of goods for others;
Philippines 7.   Proprietors,
3. The service is in the operators or keepers of
course of the hotels, motels, rest houses,
taxpayer’s trade or pension houses, inns and
business or profession resorts;
(Except in the case of 8.   Proprietors or
services done in the operators of restaurants,
Philippines by a non- refreshment parlors, cafes
resident person) and other eating places,
4. The service is for a including clubs and caterers;
valuable consideration 9.   Dealers in
actually or securities;
constructively 10. Lending
received investors;
5. The service is not 11. Transportation
exempt under the contractors under transport
NIRC, special law or of goods and cargos,
international including persons who
agreement transports goods or cargos
for hire and other domestic
common carriers by land,
relative to their transport of
goods or cargos;
12. Common carriers by
air and sea relative to the
transport and passengers,
goods or cargos from one
place in the Philippines to
another place in the
Philippines;
13. Sale of electricity by
generation, transmission, by
entity including the National
Grid Corporation of the
Philippines (NGCP) and
distribution companies
including electric
cooperatives shall be subject
to 12% VAT under gross
receipts;
14. Franchise grantees
of electric utilities, telephone
and telegraph, radio and or
television broadcasting and
all other franchise grantees;
15. Non-life insurance
companies (except their
crop insurances), including
sureties, fidelity, indemnity
and bonding companies;
and
16. Similar services
regardless of whether or not
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the performance thereof

calls for the exercise or use
of the physical or mental
faculties. (a catch-all
provision)

JURISPRUDENCE

1. Tollway operators
are service
providers and
franchise
grantees. The term
“franchise” refers
not only to
authorizations that
Congress directly
issues in the form of
a special law, but
also to those
granted by
administrative
agencies to which
the power to grant
franchises has been
delegated by
Congress. Since
VAT is imposed
on services of all
other franchise
grantees, tollway
operators are
subject to VAT.
2. Pawnshops
cannot be
considered as
lending investors,
instead they are
non-banking
intermediaries
subject to
percentage tax or
the gross receipts
tax under the NIRC.
3. Association dues,
membership fees
and other
assessments will
only be exempted
from VAT but only
to the extent of
those collected on a
purely
reimbursement
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basis.
Lease of properties 1. The lease or use of or
right or privilege to use
Note: Lease of properties any copyright, patent,
shall be subject to VAT design or model, plan,
irrespective of the place secret formula or
where the contract or lease process, goodwill,
or licensing agreement was trademark, trade brand
executed if the property is and other like property
leased or used in the or right;
Philippines. 2. The lease or the use of,
or the right to use of
(location of the any industrial,
properties) commercial or scientific
equipment;
3. The supply of scientific,
technical, industrial or
commercial knowledge
or information;
4. The supply of any
assistance that is
ancillary and subsidiary
to and is furnished as a
means of enabling the
application or enjoyment
of any such property, or
the right as is
enumerated in number
2 hereof or any such
knowledge or
information as
mentioned in number 3
5. The supply of services
by a nonresident person
or his employee in
connection with the use
of property or rights
belonging to, or the
installation or operation
of any brand, machinery
or other apparatus
purchased from such
nonresident person.
6. The supply of technical
advice, assistance or
services rendered in
connection with
technical management
or administration of any
scientific, industrial or
commercial undertaking,
venture, project or
scheme;
7. The lease of motion
picture films, films,
tapes and discs; and
SBA TAX LAST MINUTE REVIEWER

8. The lease or the use of

or the right to use radio,
television, satellite
transmission and cable
television time.

Transactions deemed sale Transfer, use or consumption Gross selling price is BASIS FOR
not in the course of business of unreasonably lowed than OUTPUT TAX:
goods or properties originally the actual market value if its market value of
intended for sale or for use in lower by more than 30% the goods
the course of business; of the actual market deemed sold
value of the same goods of
XPN: the same quantity and INVOICING
quality sold in the immediate REQUIREMENTS:
1. Foreign donations of locality on or nearest the A memorandum
computers to education date of sale. entry in the
related agencies subsidiary sales
2. local donation where the journal to recor
personal computers, withdrawal of
laptops, tablets, or goods for personal
similar equipment are use
originally intended for
sale or for use in the
course of business by the
donorZERO-RATED (so
creditable ang input tax)
3. inventory used for
promotions and office
supplies
Distribution or transfer to: Examples: BASIS FOR
 Shareholders or investors OUTPUT TAX:
as share in the profits of Declaration of property market value of the
the VAT registered dividends to stockholders. goods deemed sold
persons: or
 Creditors in payment of a
debt or obligation;

Consignment of goods if BASIS FOR

actual sale is not made within OUTPUT TAX:
sixty (60) days following the date market value of the
such goods, were consigned; and goods deemed sold
 The transaction is
considered a deemed INVOICING
sale as far as the REQUIREMENTS:
consignor is concerned. Invoice

Dacion en pago BASIS FOR

OUTPUT TAX:
market value of the
goods deemed sold
Retirement from or cessation of Examples: BASIS FOR
business, with respect to 1. Closing out sale OUTPUT TAX:
inventories of taxable goods acquisition cost or
existing as of such retirement or the current market
cessation. price of the goods
SBA TAX LAST MINUTE REVIEWER

or properties,
whichever is lower.

Importation of goods,  If the importer is not GR: VAT based on

whether for business of exempted, VAT will be the total value
not paid upon importation. used by the
 Assuming importer is Bureau of
exempt from VAT, the Customs, plus
transaction is not subject customs duties,
to VAT. excise taxes, and
 Subsequent sale to a other charges are
non-exempt person, paid by the
transaction is subject to importer prior to
VAT the release of such
goods from
customs custody.
(Section 107[A],
NIRC) or Based on
the landed cost,
when the customs
duties are
determined in the
basis of the
quantity or volume
of the goods

EXC: If the
importer is a
person, entity or
agency exempt
from taxes, the
purchaser,
transferee, or
recipient shall be
considered the
importers thereof,
and shall be liable
for any internal
revenue tax on
such importation.
(Section 107[B],
NIRC)

QUICK NOTES:
1. ale of movie tickets is not subject to VAT but subject to amusement tax. However, cinematographic film
owners/producers and lessors are subject to the 12% VAT on their share in the gross sales or receipts
representing the rental income for the use or lease of cinematographic films.
2. gross selling price and gross receipts are exclusive of VAT so you still need to add the VAT.
3. Actual or constructive receipt of the contract price, compensation, remuneration or fee makes the seller of service liable to
VAT, even if the service is yet to be performed by him
4. All gross receipts from services rendered by the partners shall be entirely taxable to the partnership.
5. When an affiliate provides funds to a taxpayer who then uses such funds to pay a third party, the transaction is not subject
to VAT because there was no sale.
6. The total amount of deemed sale shall be included in the return to be filed for the month or quarter.
SBA TAX LAST MINUTE REVIEWER

RULES ON GROSS RECEIPTS

Included Not included
1. Payments on the contract price, compensation, 1. those amounts earmarked for payment to
service fee, rental or royalty unrelated 3rd party
2. The amount charged for materials supplied with - unrelated means exluding the following
the services persons: (1) taxpayer’s EEs (2) partners (3)
3. Deposits applied as payments for services affiliates (4) relatives by consanguinity (5)_
rendered and advance payments trust funds
4. Payment constructively received (so include those 2. Amounts received as reimbursement for advanced
amounts withheld) payment on behalf of another which do not
redound to the benefit of the payor

QUICK NOTES
1. If exempted—way Vat pero di ka ka-credit sa imong input tax
2. If zero-rated—way VAT pero kacredit ka sa imong input tax.

ZERO-RATED SALE OF GOODS

 Zero rated for VAT registered
 Vat exempt for non-VAT registered
Sale and actual shipment of goods from the Philippines to
a foreign country irrespective of any shipping
arrangement; and paid for in acceptable foreing currency
Sale and deliver goods to
a. Registered enterprises within separate custom
territory as provided by special law
Sale of raw materials or packaging materials by a VAT-
registered entity to a non-resident buyer:
a. For delivery to a resident local export-oriented
enterprise
b. Used in the manufacturing, processing,
packaging, repacking in the Philippines of the said
buyer’s goods
c. Paid for in acceptable foreign currency and
Export sales
accounted in accordance with the rules of BSP
Sale of raw material or packaging materials to Export
oriented enterprise whose export sales exceed 70% of
total annual production
Sales of goods, supplies, equipment and fuel to persons
engaged in shipping or international air transport
operations provided that:
1. GSE shall be used and
2. For international shipping or air transport
operations
Sales to diplomatic missions and other agencies and/or
instrumentalities granted tax immunities of locally
manufactured, assembled or repacked products whether
paid for in foreign currency or not.
Effectively zero-related transaction Local sale of goods and properties by a VAT-registered
person to a person or entity who was granted indirect tax
exemption under special laws or international agreement

ZERO-RELATED OF SERVICES- subject to 0% VAT but input taxes on purchases may be allowed as tax
credits or refund.
SBA TAX LAST MINUTE REVIEWER

Transport of passengers and cargo by domestic air or sea

vessels from the Philippines to a foreign country; and
Sale of power or fuel generated through renewable
sources of energy;
 Services rendered to: (economic zones)

For agricultural cooperatives

Basta sale to membersVAT exempted jud na bisag
asa pa gagikan ang produce.

For non-agricultural cooperative, ang operative fact

is on the contributions made by the members.

If a cooperative is exempted from VAT arising from the

sale of own produce to its members, as a logical and
necessary consequence then of its established VAT
exemption, the cooperative is likewise exempted from
the payment of advance TAX.

12% VAT 0% VAT EXEMPT

Domestic transport of passengers or International transport of passengers Transport of passengers by
cargoes by air or cargoes by air or sea international air and shipping carrier

CREDITS AND REFUNDS

REQUISITES TO CLAIM FOR VAT REFUND (VZDNNA)
1. Taxpayer is VAT-registered
2. Taxpayer is engaged in zero-rate or effectively zero-rated sales
3. Input taxes are due or paid
4. Input taxes are not transitional input taxes as it cannot be claimed as a refund or credit
5. Input taxes have not been applied against output taxes during and in the succeeding quarters
6. Input taxes claimed are attributable to zero-rated or effectively zero-rated sale.
7. Tung mga sales to foreigners, dapat ang acceptable foreign currency exchange proceeds be duly accounted for in
accordance with the rules and regulations of the BSP.

QUICK NOTES

 Sales invoices and documents other than official receipts are not proper in substantiating zero-
rated sales of services in connection with a claim for refund. When a VAT taxpayer claims to have
SBA TAX LAST MINUTE REVIEWER

zero-rated sales of services, it must be substantiate the same through valid VAT official receipts,
not any other document, not even a sales invoice which properly pertains to a sale of goods and
properties.
 In a claim for tax refund or tax credit, the applicant must prove not only entitled to the claim but also compliance
with all documentary and evidentiary requirement.
o Prove payment of input vat to supplier
o Provie zero-rated sales to purchasers.
 Refunds are only allowed for taxes erroneously or illegally assessed or collected. If you did not declare
your input taxes on your VAT returns, then you are precluded from claiming the same. This means you could not
offset the undeclared input taxes against the output VAT.

 INPUT TAXES MUST BE SUBSTANTIATED AND REPORTED IN THE VAT RETURNS TO BE ABLE TO CLAIM CREDIT
AGAINST THE PUTPUT TAX.
1. Substantiated in the form of VAT receipts (for sales of services) or VAT invoices (for sales of goods)
2. The words zero-rated must also be stated in the VAT receipt or invoice.
a. This prevents from falsely claiming IVAT from their pruchasers when not VAT was actually
paid.
b. Failure to print the word “zero-rated” in the invoice or receipts is fatal to a claim for
credit/refund
3. For services rendered to non-resident foreign corporations, the following must be proven:
a. Their client was established under the laws of a country not the PH and
b. Not engaged in trade or business in the Philippines

TIME PERIOD FOR ADMINISTRATIVE CLAIM

 2 years after the close of the taxable quarter when the zero-rated sales were made, dili time nga nibayad kag
input tax.
 2 years from the date of cancellation

VAT-REGISTRATION

SUMMARY OF RULES FOR VAT-REGISTRATION

Business Effect

Gross sales exceed Mandatory VAT registration. Generally liable to pay 12% VAT
PhP3M

Gross sales do not Subject to option VAT registration

exceed PhP 3M
If VAT-registered: generally liable to pay 12% VAT

If non-VAT registered: generally liable to pay 3% VAT

If VAT-registered ka, you have to comply with the invoicing requirements and place your TIN followed by the word VAT in
ur invoices or receipts.

TIN!

PERSONS REQUIRED TO OR MAY SECURE TIN: NOT REQUIRED TO SECURE A TIN

Every person subject to any national internal revenue tax; In cases of diplomatic missions; and
Any person, although exempt from the imposition of international organizations, as identified by the DFA,
taxes, is nevertheless required to withhold taxes on together with their accredited foreign personnel
income payments made to taxable individuals or entities;
Any person required under the Code to make, render or Privilege stores (whose doing business for not more than
SBA TAX LAST MINUTE REVIEWER

file a return.; and 15 days)

- Ang muregister ani kay ang exhibitor or
organizer.
- But if muexceed na ug 15k, di naka privilege
stores.
Persons whether natural or juridical, dealing with all
government agencies and instrumentalities, including
GOCCs, and all LGUs.

NOTE: REGISTRATION AND TIN ARE INTERRLATED CONCEPTS but YOU MAY BE REQUIRED TO GET A TIN WITHOUT
PAYING THE ANNUAL REGISTRATION FEE.

The following are exempt from the imposition of ARF

1. Cooperatives duly registered with the CDA;
2. Individual residents earning purely compensation income
3. OCWs/OFWs;
4. Marginal Income Earners;
5. GAIs, in the discharge of their governmental functions;
6. LGUs, in the discharge of their governmental functions;
7. Tax exempt corporations such as those enumerated under Section 30 of the Code, as amended, in
pursuance of tax-exempt activities;
8. Non-stock/non-profit organizations not engaged in business;
9. Persons subject to tax under one-time transactions;
10. Persons registered under EO 98, series of 1998;
11. Facility/ies where no sales transactions occur.

Elements of MEI
 Not a compensation earner
 Gross sales or receipts not exceeding 100k in any 12-month period
 Has a business in the following
o Agricultural growers/producers (farmers/fishermen) selling directly to
o ultimate consumers;
o Small sari-sari stores;
o Small carinderias or “turo-turos”; or
o Drivers/operators of a single unit tricycle.

NOTE: MEI is required to register for VAT but is not required to pay ARF.

FINAL WITHHOLDING VAT

Quick notes:

1. What if musell ka sa usa ka government agency

a. OVAT is still 12% (ang iimpose sa seller)
b. IVAT is 7% because 5% is withhehld by the government
2. Service rendered in the Philippines by non-resident foreign persons
a. 12% ang withhold sa ibayad nila.
VAT RETURNS
Q: When daw ang deadline for monthly and quarterly VAT returns?
A: In Q1
Sa first two months (January and February): Monthly return not later than 20 days following the close of the
20th day of the following month. (February 20 and March 20)
Sa third month: File a quarterly return (covering Jan to March on April 25)  
SBA TAX LAST MINUTE REVIEWER

In Q4
October: November 20
November: December 20
December: January 25 of the next year

Pay as you file system. 

MISCELLANEOUS

SUBJECTS TAX TREATMENT

Director’s fees Depends if there is an ER-EE relationship. If naa, di
subject to VAT.
Agency fees to security agencies Only the agency fees less the compensation of the
guards.

PERCENTAGE TAX
SUBJECT TO PT EXEMPT
Gross annual sales and/or receipts do not exceed the Cooperatives and self-employed and professions NOT
amount of P3,000,000; exceeding 500k threshold
Not VAT-registered
Cooperatives and self-employed and professions
exceeding 500k threshold
Common carrier’s tax


Cockpits 18%

Cabarets, night or day clubs 18%

Boxing exhibitions 10%

Professional basketball games 15%

Jai-Alai and racetracks 30%

GRT

Interest, commission and discount 5%

from lending activities; MATURITY
PERIOD IS 5 YRS OR LESS

Interest, commission and discount 1%

from lending activities; MATURITY
PERIOD IS MORE THAN 5 YRS

dividends and equity shares and net 0%

SBA TAX LAST MINUTE REVIEWER

income of subsidiaries

Royalties, rentals of properties 7%

(because some banks lease their
premises; or rentals on their safety
deposit box)

Net trading gains within the taxable 7%

year on foreign currency, debt
securities, derivatives, and other
similar financial instruments

DOCUMENTARY STAMP TAX

SUBJECT VALUATION EXAMPLE COMPUTATION
Original issue of shares Two pesos (P2.00) on each Two (10m divided by 200) times 2
hundred pesos (P200), or
fractional part thereof,
Of the par value of such shares of
stock
Sales. agreements to sell. With par value With no par [P400,000/ 200] x P1.50 = P3,000
memoranda of sales. value
deliveries or 1.50 on each to Fifty, percent
transfer of shares or two hundred (50%) of the
certificates of stock pesos (P200), or DST paid upon
fractional part the original
But in the recent RMC, the DST thereof, of the par issue of said
impopsed shall also be applicable to value of such stock
the following: stook.
 Transfer pursuant to a deed
of donation;
 Transfer pursuant to a will
of the decedent as
approved by the probate
court in a judicial settlement
of estate; and 
 in case of a Judicial
Settlement of Estate as
approved by the probate
court or an Extrajudicial
Settlement of Estate (both
without a Will), the heir/s
specifically waive/s or
renounce/s his or her share
over the inheritance (i. e.,
shares of stocks left by the
decedent), then, in such a
situation, the renounced/
waived shares of stock to be
transferred to another heir/s
shall also be subject to DST
pursuant to Section 175 of
the L997 Tax Code, as
SBA TAX LAST MINUTE REVIEWER

amended

Debt instruments P1.5 for every

P200, or a
Only one DST shall be imposed on fraction thereof.
one transaction, notwithstanding
there are more than one debt
instruments required by the bank
(e.g. when the bank requires a loan
agreement and a promissory note).
Lease agreements  P6.00 on the first P2,000, Question: If the total rental fee for a
or a fraction thereof; period of 5 years is P500,000
 Additional P2.00 for every
P1,000, or a fraction First: 500k minus 2k= 498k
thereof, in excess of the
Excess: 498k divided by 1k then
P2,000 multiply by 2

Last: nya add back the 6k 

Deeds of sale and conveyances for the first P1,000 is P15. In the
and donation of real property excess thereof, P15 for each P1,000

DOES NOT DISITNGUISH

BETWEEN CAPITAL AND
ORDINARY ASSETS.

EXEMPTED FROM DST

Loan agreements or promissory notes, the aggregate of
which does not exceed P250,000 - exempted from DST
under Sec. 179 (DST on debt instruments)
Sale, barter or exchange of shares of stock listed and exempted from DST but still subject to stock transfer
traded through the local stock exchange - tax
Transfer of property pursuant to Section 40 (C) (2) (tax-
free exchange or transfer of property is exempt from
income tax) of the National Internal Revenue Code of
1997, as amended

(TAX FREE TRANSFERS)