Automativ ZERO-rated
transactions
Effectively ZERO-rated
transactions
is a person or entity
granted VAT exemption
under the Tax Code, a
special law or an
international agreement to
which the Philippines is a
signatory, and by virtue of
which its taxable
transactions become
exempt from VAT
WITH RECOVERYT of
INPUT vat.
Sales of Services
Treated as INDIRECT
EXPORT 0% based on
NIRC provided the Seller is
a VAT-Registered person
Treated as performed
outside the Philippine
territory 0% based on
cross border doctrine1
under the VAT System
provided the Seller is a
VAT-Registered person
If the SELLER is NON-VAT Registered person --the transactions are subject to VAT under NIRC.
ZERO-RATED
TRANSACTION
A taxable transaction but
DOES not result in an
output tax;
Input vat on the purchases
of a VAT-registered person
with 0% may be allowed as
tax credits or refunded
VAT registration is
mandatory
EXEMPT
TRANSACTION
Is exempt from VAT, hence,
NOT subject to OUTPUT
tax
Seller in an exempt
transaction is NOT entitled
to ANY input tax on his
purchases despite the
issuance of a VAT invoice
or receipt
VAT registration is
OPTIONAL
PEZA-ENTERPRISES or in ECOZONEs
Cross Border Doctrine - no VAT shall be imposed to form part of the cost of
goods destined for consumption outside of the territorial border of the taxing
authority.
1