How to Calculate VAT in the Philippines

Understanding Your VAT Calculator Results

VAT Amount: VAT Amount: The tax calculated based on the 12% VAT rate in the Philippines. This shows the extra amount due to VAT.

Total Amount: After adding VAT, it’s what you pay or charge in total. When subtracting VAT, it’s the price before including VAT.

How to Add VAT to a Net Price in the Philippines

To add VAT to a net price (the price before VAT), you can use the following formula:

Total Price = Net Price×(1 + VAT Rate)

Example: If you have a net price of PHP 1000 and the VAT rate is 12% (0.12 as a decimal), the calculation would be:

Total Price= 100o×(1+0.12)= 1000×1.12= PHP 1200

So, the price including VAT would be PHP 1200.

How to Subtract VAT from Gross Price in the Philippines

To find the net price (the original price before VAT was added) from a gross price (the total price including VAT), use this formula:

Net Price = Gross Price / (1 + VAT Rate)​

Example: If your gross price is PHP 1000 and the VAT rate is 12%, the calculation would be:

Net Price= 1000/1.12 = PHP 892.86

So, the original price before VAT was added is PHP 892.86.

Who Needs to Register for VAT in the Philippines

In the Philippines, VAT registration is mandatory for businesses whose annual gross sales or receipts exceed PHP 3,000,000 (around USD 55,000). However, certain businesses such as Import companies are required to register for VAT regardless of their income level.

It is also possible to register for VAT voluntarily. For more details on VAT registration in the Philippines, fill out the form below and we will put you in touch with one of our consultants.

Products and Services Exempted from VAT in the Philippines

Here are the details for VAT exemptions in the Philippines based on different product and service categories:

Category	VAT Exemption Details in the Philippines
Agricultural Products	Sale or importation of agricultural and marine food products in their original state, livestock and poultry used for food, and breeding stock and genetic materials
Educational Materials	Sale, importation, printing, or publication of books, newspapers, magazines, and educational materials covered by UNESCO agreements
Medical	Sale or importation of prescription drugs and medicines for cancer, mental illness, tuberculosis, and kidney diseases
Educational Services	Services provided by accredited private educational institutions and government educational institutions
Medical Services	Medical, dental, hospital, and veterinary services, except those rendered by professionals
Financial Services	Services of banks, non-bank financial intermediaries performing quasi-banking functions, and other non-bank financial intermediaries
Residential Leases	Lease of residential units with monthly rental not exceeding a certain amount (subject to periodic adjustments)
Transportation	Transport of passengers by international carriers and domestic air or sea vessels from the Philippines to a foreign country
Renewable Energy	Sale of power generated through renewable resources such as geothermal, hydropower, solar, and wind
Export-related	Services and sales to registered export enterprises for use in their registered activities

These exemptions are based on the most recent update as per Revenue Regulation No. 3/2024, which amended certain VAT and percentage tax provisions and is effective from April 26, 2024. 

It’s important to note that the specific conditions and thresholds for these exemptions may change.

For the most up-to-date and detailed information regarding tax and accounting in the Philippines, it’s advisable to consult with Emerhub’s tax professionals.