Chapter 4
Exempt Sales of Goods, Properties and Services
Exempt sales are exempt consumption of goods or services from domestic sellers. Exempt sales are not
subject to VAT and Percentage tax.
Hence,
1. VAT taxpayers making exempt sale of goods, properties, or services shall not bill any output VAT
to their customers because the sale is not subject to VAT.
2. A non-VAT person making exempt sales shall not be subject to the 3% percentage tax on the
sales or receipt.
Exempt sales of goods or properties
1. Sale of goods to senior citizens and persons with disability
-this covers sale of essential goods only.
2. Sales of exempt goods
a. Agricultural and marine food products in their original state.
b. Fertilizers, seeds, seedlings and fingerlings, fish, prawn, livestock and poultry feeds, including
ingredients used in the manufacture of finished feeds.
c. books, newspapers or magazines
d. Medicines prescribed for diabetes and hypertension
e. Passenger or cargo vessels and aircrafts
3. Sales of goods by cooperatives
-sales by agricultural cooperatives duly registered in good standing with the Cooperative
Development Authority (CDA) to their members, as well as sales 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.
-Sales by non-agricultural, non-electric and non-credit cooperatives duly registered and in goods
standing with the CDA.
4. Sales of residential properties
1. Sale of real properties utilized for low-cost building
2. Sale of real properties utilized for socialized housing
3. Sale of residential lot valued at P1,919,500 and below and other residential dwelling valued at
P3,199,200 and below
5. Export sales by non-VAT persons
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6. Treaty-exempt sales of goods
Sales of goods exempt under international agreement to which the Philippines is a signatory or under
special laws.
7. Tax-free exchange of property
8. Sale of gold to the Bangko Sentral ng Pilipinas
(Mnemonic: SECRET tax-free Gold)
Exempt sale of services
1. Schools
2. Employees
3. Agricultural contract growers and millers
4. Residential leasing
-lease of residential unit with monthly rental not exceeding P15,000
5. Cooperative services
6. Hospitals
7. Home owner’s association or condominium corporations
8. Lease passenger or cargo vessels and aircrafts, including engine equipment and spare parts thereof
for domestic or international transport operations
9. Treaty-exempt services
10. Regional area headquarters
11. International carriers
12. Printers or publishers
13. Senior citizens and persons with disability
(Mnemonic: SEARCH2 VA TRIPS)
Other exempt sales of goods or services
1. Sales of goods or services taxed by special laws
a. Sales of goods or services by ecozone locators
b. Sale of amusement service by theaters and cinemas
These are subject to tax by special laws and are not subject to national business taxes sucha s VAT or
percentage tax.
2. Sales by persons not engaged in businesses
3. Sales of assets held for use
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-except VAT-registered taxpayers in which sale of these ordinary assets is considered incidental
transactions subject to VAT.
EXEMPT SALES OF GOODS OR PROPERTIES, IN DETAIL (SECRET Tax-free Gold)
1. Sale of goods to senior citizens and persons with disability
Sale of goods SC PWD
a. Drugs, vaccines and foods for special medical / /
purpose
b. Vitamins and mineral supplements / X
c. Accessories and equipment by or for senior / X
citizens, such as eye glasses, hearing aid, dentures,
prosthetics, artificial bone replacements, walkers,
crutches, wheelchairs, quad canes, geriatric
diapers, and other essential medical supplies,
accessories and equipment
d. Casket or urn / /
Aside from VAT exemption on the sales, senior citizens and PWD s are also legally mandated to
be given 20% discount on the sales of these goods.
Illustration
Special care store, is a business catering for the needs of seniors and persons with disabilities. It
had the following sales of goods during the month:
Senior citizens PWDs
Vitamin supplements P300,000 P100,000
Medical drugs 100,000 140,000
Eye glasses and wheelchairs 80,000 120,000
Household and kitchen 200,000 100,000
supplies
Caskets and urns 240,000 120,000
Memorial lot 300,000 200,000
Amount exempted from VAT:
Senior citizens_________
PWDs________________
Sale of exempt goods
Agricultural or marine products and inputs
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a. Sale of agricultural and marine food products in their original state, livestock and poultry of
a kind generally used as, or yielding or producing foods for human consumption ; and
breeding stock and genetic material therefore;
b. Sale of fertilizers; seeds, seedlings and fingerlings; fish, prawn and poultry feeds, including
ingredients, whether locally produced or imported, used in the manufacture of finished
feeds, except specialty feeds.
The conditions for exemption to the VAT on importation of agricultural or marine food products in
chapter 2 likewise apply to the exemption of sales herein from business tax.
Illustration 1
Mang Pandong owns a meat and fish outlet in the Baguio City public market. He had the following sales
during the month:
Sale of hogs P120,000
Sale of frozen carcass and meat 240,000
Sales of fresh fishes 150,000
Sales of dried and/or smoked fish 80,000
Amount exempted from business tax___________
Illustration 2:
Sale of palay and rice P1,000,000
Sale of banana and mushrooms 100,000
Sales of firewood and charcoal 150,000
Sales of orchids, flowers, and bonsai 250,000
VATable sales__________________
Illustration 3:
The following relates to the sales of Mr. birdie, a poultry operator:
Sale of chicken P400,000
Sale of one-day old chicks 120,000
Sales of eggs for penoy and balot 180,000
Sales of chicken manure 100,000
Vatable sales___________
Illustration 4:
Raymund, a vet, operates a petshop. The following were his sales and receipts during the month:
Sale of pets P600,000
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Sale of animal vitamins, medicines and feeds 200,000
Receipts from veterinary services 200,000
Vatable sales___________
Illustration 1
Monte Rey had the following sales in his store:
Sales of meat cut P400, 000
Sale of hotdogs 100,000
Cup noodles 40,000
Exempt sales_____________________
Illustration 2
Juan, a dealer of sugar made 400,000 worth of muscovado sugar and P600,000 worth of refined sugar.
Exempt sales_______________
Sale of certain farm or fishery inputs
Illustration:
A farm supply dealer sold the following items:
a. Tractor and water pumps
b. Seeds
c. Organic and inorganic fertilizers
d. Pesticides and herbicides
Exempt sales_________________________
Livestock/poultry feeds for ingredients in the manufacture of feeds
The sale of livestock or poultry feeds and ingredients used in the manufacture of finished feeds is
exempt.
However,the sale of ingredients which may be used for the production or processing of food for human
consumption is vatable.
Books, newspapers and magazines
Illustration
Jet Bookstore sold the following goods:
Novels P100,000
Textbooks 300,000
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School supplies and notebooks 200,000
Office supplies 180,000
Advertising magazines 20,000
Exempt sales___________________
Medicines for diabetes, high cholesterol or hypertension
Examples:
1. Insulins and analogues
2. Blood glucose lowering drugs, such as biguanides, sulfonylureas, alpha glucosidase inhibitors,
thiazolidinediones, dipeptidyl peptidase 4 inhibitors, glucagon-like peptide-1 analogues
andsodium glucose cotransporter 2 inhibitors; and others
Illustration
St. Joseph Medical Store made the following sales during the quarter:
Senior citizens PWDs others
Vitamins 300,000 20,000 500,000
Insulin 200,000 100,000 400,000
Other medicines 100,000 140,000 300,000
Medical monitoring 50,000 20,000 150,000
devices
Medical therapy 80,000 10,000 210,000
equipment
Total 730,000 290,000 1,560,000
Exempt sales:
SCs____________________
PWDs__________________
Others__________________
Passenger or cargo vessels
The sale of passenger or cargo vessels and aircrafts including engines, equipment, and spare parts
thereof for domestic or international transport operations is exempt from VAT.
Sale of Cooperatives
With the exception of electric cooperatives, cooperatives of any kind are exempt from business tax if
they transact business only with members. Cooperatives which transact business with non-members are
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subject to business tax on their sales to non-members if their accumulated reserves exceed
P10,000,000.
However, regardless of the type of cooperative, their transactions from unrelated activities are subject
to business taxes.
Illustration 1: Cooperative transacting business only with members
A credit cooperative which transacts business only with members reported the following sales during
the month:
Related activities Unrelated activities
Sales from members P200,000 P100,000
Sales from members - 20,000
Total P200,000 120,000
Exempt sales_______________
Illustration 2: Cooperative transacting business with non-members
A farming cooperative which transacts business with members and non-members had the following
sales during the month:
Related activities Unrelated activities
Sales from members P200,000 P100,000
Sales from members 300,000 20,000
Total P500,000 120,000
The total exempt sales assuming the accumulated reserves do not exceed 10,000,000______________
The total exempt sales assuming the accumulated reserves exceed 10,000,000______________
Sales of Properties under certain conditions:
Categories of exempt transactions on real properties
A. By a person not engaged in the realty business(non-dealer)
-exempt from business tax (sale of real properties not primarily held for sale or held for lease in
the ordinary course of business)
-except sale of properties held for use classified as ordinary asset by VAT taxpayers (considered
as incidental transaction subject to VAT)
The VAT exemption applies to:
a. Real property classified as capital assets of VAT taxpayers
b. Any real properties of non-VAT taxpayers
c. Any real properties of persons not engaged in business
Illustration 1
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Dr. Ato, a VAT-registered medical doctor, sold his principal residence for P12,000,000 and his medical
clinic building for P50,000,000 to purchase a bigger building for his medical practice.
Exempt sales_________________
Illustration 2
Mr. lee Mado, is a non-VAT registered lawyer. He disposed of his law office building for P8,000,000 to
pursue his dream of establishing a beauty parlor.
Exempt sales______________
Mr. K, a farmer, sold his rice farm land for P4,000,000 to finance his acquisition of a fish pond.
Exempt sales____________
*Note: In law, percentage tax is limited to the sale of goods or services in the ordinary course of
business in the course of business to the exclusion of incidental transactions. The sale of ordinary assets
held for use is not subject to percentage tax.
B. By a person engaged in the realty business which complies with statutory price ceilings (dealer)
Sale by a realty dealer, developer or lessor
The sale of businesses engaged in the real estate business is normally subject to business tax. However,
their sales of the residential properties, being essential goods, are exempt if they comply with the
statutory or regulatory price ceilings:
1. Sale of real properties utilized for socialized housing units:
a. House and lot package-P450,000
b. Residential lots only-P180,000
2. Sale of real properties utilized for low-cost housing wherein the price ceiling per unit is P750,000
3. Sale of residential lot valued at P1,919,500/unit and below
4. Sale of residential dwelling valued at P3,199,200/unit and below.
Illustration 1
ABC realty corporation sold a residential lot at a price of P1,800,000.
Exempt sale_________
Illustration 2
ABC realty corporation sold a house and lot at a price of P3,200,000
Exempt sale___________
Illustration 3
Don Pedro, an employee, sold a residential lot for P2,000,000.
Exempt sale_________
Illustration 4
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The National Housing Authority, a government agency, sells “low-cost housing units” with a price of
P1,000,000 per unit to qualified applicants.
Exempt sale____________
Sale of adjacent lots
For the purpose of the ceiling, the sale of adjacent residential lots, house and lots, and other residential
dwellings within the 12-month period in favor of one buyer shall be treated as one. This rule is intended
to counter unwarranted partition of the sale into several deeds to evade the business tax.
Illustration
C Realty sold a residential house and lot for P1,800,000 together with an adjacent parking lot separately
priced for P200,000 to a buyer.
Exempt sale______________
Export sales of non-VAT taxpayers
The export sale on non-VAT taxpayers are exempt from percentage tax. Under the law, however, the
export sale of VAT taxpayers is taxable to the VAT but at 0% rate.
Illustration 1
Ina V. is a non-VAT registered corporate producer of high value crops and agricultural products for
export and domestic sales. It had the following sales during the quarter:
Domestic sales Export sales total
Sales of banana 400,000 1,200,000 1,600,000
Sales of Kalinga 500,000 1,800,000 2,300,000
oranges
Sale of wine and 40,000 400,000 440,000
vinegars
total 940,000 3,400,000 4,340,000
Exempt sales:
Domestic sales___________
Export sales______________
Illustration 2
Assume the same given in Illustration 1, except that Ina V. is a VAT-registered taxpayer but did not opt
to subject its exempt sales to VAT.
Exempt sales:
Domestic sales___________
Export sales______________
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Sales exempt under treaties, international agreements or special laws
Examples:
1. Peza-registered enterprises
2. ADB
3. IRRI
4. PNRC
5. Embassies
6. PAGCOR
Illustration 1
U Company, a non-VAT taxpayer, supplies the Asian Development bank with supplies . During the
quarter, U company made total deliveries of supplies worth P500,000.
Exempt sales________
Illustration 2
Assuming the same information in the previous illustration, except that U Company is a VAT-registered
taxpayer.
Business tax applicable______________
TAX-FREE EXCHANGE OF PROPERTY (REFER RO PAGE 114 OF THE PRESCRIBED TEXTBOOK)
Sale of GOLD to the Bangko Sentral ng Pilipinas (BSP)
The TRAIN law reclassified the sale of gold to the BSP from zero-rated to exempt. Under RA 11256, the
tax applies both to registered small scale miners and registered gold traders.
Illustration 1
Mang Jose, a non-VAT registered miner, sold to the BSP his gold production of 2,000 grams of raw gold
nuggets with specific gravity of 14.9.
The final BSP assay results in the following pay-out before refining charges:
Final assay Price/gram price
Gold( 74%) 1,480 g 2,140 3,167,200
Silver(18%) 360 g 53 19,080
Trace elements 160 g
total 2,000 g 3,186,280
Exempt sales_______________
Illustration 2
Assuming the same information in illustration 1 except that Mang Jose is a VAT-registered miner.
Exempt sales_________________
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Illustration 3
Boss E is a gold trader. He purchases gold and silver from electronic scrap metal refiners and small-scale
miners. He refined the gold and sold them to the following:
jewelers bsp total
Sales of gold 200,000 800,000 1,200,000
Sales of silver 100,000 40,000 140,000
total 300,000 840,000 1,340,000
Exempt sales_____________
Vatable sales____________
The small scale mining industry
Congress lifted the income tax, excise tax and business taxes so that gold will again enter the coffers of
the National Treasury. There is no tax for the BIR but there is gold in the treasury which help strengthen
our Gross International Reserve.
EXEMPT SALES OF SERVICES, IN DETAIL (SEARCH2 VA TRIPS)
EDUCATIONAL SERVICES OF SCHOOLS
The exemption does not cover services rendered by educational institutions that are not accredited by
Dep-Ed, CHED or TESDA, such as:
1. Seminars
2. In-service trainings
3. Review classes
4. Other similar services
Illustration 1
Hebron College, a private college accredited by CHED, reported P2,000,000 receipts from tuition fees
during the month. Hebron also reported P100,000 rental income from the building being rented by
commercial tenants.
Exempt receipts________
Illustration 2
Top Pampanga, an accredited continuing professional education provider, provides professional services
, professional reviews and certification programs for graduates and professionals.
Exempt receipts__________
EMPLOYMENT
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-provision of services under an employer-employee relationship is not a business. Hence, exempt from
business taxes.
Professional practitioners, consultants, talents, tv artists, brokers and agents are not employees; hence,
subject to business taxes.
Illustration 1
Aljon, an audit practitioner and a part-time teacher earned the following:
Compensation income P1,800,000
Receipts from audit clients 1,200,000
Exempt sale_________
Illustration 2
Dr, Almor arranged with a hospital to accept his clients. He entertains clients in the hospital. The
hospital shall bill his professional fees in the name of the hospital. The hospital repays Dr. Almor his
professional fees less hospital accommodation charges.
Exempt receipts_____________
Director’s Fees
-director’s fees do not arise from an undertaking that is intended to be pursued in the course of
business. Hence, exempt.
AGRICULTURAL CONTRACT GROWERS AND MILLERS
Services by agricultural contract growers and milling for others of palay into rice, corn into grits, and
sugar cane into raw sugar.
Agricultural contract growers refers to persons producing for others poultry, livestock or other
agricultural and marine food products in their original state.
Illustration 1
John was contracted by Purepork, a distributor of pork and chicken meat products, to raise hogs and
chicken. John shall be paid a fixed contract price for the undertaking.
Exempt receipts_____________
Illustration 2
Cordilleran Mining Company offers a variety of milling services ranging from palay, corn, cane to raw
sugar, and gold ores. It had the following receipts during month:
Palay and corn miling fees P600,000
Sugar milling fees 200,000
Ore ball milling fees 400,000
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Exempt receipts_______________
Illustration 3
H Company is a general agricultural contractor. It had the following receipts during the month:
Rice and corn milling fees P170,000
Construction fees for a poultry building 500,000
Installation fee for a biogas plant 300,000
Installation fee for a solar-power plant 200,000
Cultivation fees for rice field preparation 50,000
Installation fee for a submersible pump 80,000
Total P1,300,000
Exempt receipts___________
Illustration 4
SA Dressing Company operates a chicken dressing plant whereby chicken of farm producers are brought,
slaughtered , cut and dressed for supermarket sales.
Exempt receipts_____________
Illustration 5
You Lechon Inc. sells charcoal roasted swine, chicken or ducks offered with different menus in its dining
outlets.
Exempt sales_________
Illustration 6
Chooks sells roasted swine chicken and ducks alone without the dining space where customers buy and
leave.
Exempt sales______________
RESIDENTIAL LEASING
Lease of residential unit with monthly rental not exceeding P15,000
Residential units-refers to apartments and houses and lots used for residential purposes, and building or
parts thereof used as dwelling places such as, dormitories, rooms and bed spaces, except motels, motel
rooms, hotels, and hotel rooms, lodging houses, inns and pension houses.
The term unit shall mean:
1. An apartment unit-in the case of apartment
2. A house-in the case of residential houses
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3. Per person-in the case of dormitories, boarding houses and bed spaces
4. Per room- in the case of rooms for rent
Illustration 1
Cohen Homes is a real property lessor with the following properties and receipts:
Per unit rental Annualized rent
Apartment houses 20,000 480,000
Residential houses 12,500 750,000
Boarding houses 2,000 2,400,000
Total annual rent 3,630,000
Tax status
Apartment houses
Residential houses
Boarding houses
Illustration 2
Alpine Residence is a real property lessor with the following properties:
Per unit rental Annualized rent
10 class A residence 20,000 2,400,000
12 class B residence 16,000 2,304,000
30 class C residence 15,000 5,400,000
Total annual rent 10,104,000
Tax status
10 class A residence
12 class B residence
30 class C residence
Illustration 3
Gensan Travel Lodge has 200 rooms with average occupancy of 24 days a month. Gensan Travel Lodge
charges P2,000 for each day of stay. It earns P320,000 average monthly fees
Exempt sales______________
Sale of Services by Cooperatives
The gross receipts from sale of services by cooperatives such as lending, marketing or multi-purpose
cooperatives is exempt similar to the rules discussed under sales of goods by cooperatives.
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Health or Hospital Services
Medical, dental, hospital and veterinary services except those rendered by professionals and sales of
drugs by hospital drugstores.
Illustration
Betany hospital, a private hospital. Had the following receipts and sales during a month:
Patient service revenue P10M
In-patient sales 1M
Out-patient sales
-anti-diabetes and hypertension medicines 800k
-other medicines 3M
-check-up fees 200k
Laboratory services 2.7M
Rent income on clinic space leased to doctors 500K
Total 18.2M
Exempt sales and receipts_________________
HOME OWNER’S ASSOCIATION OR CONDOMINIUM CORPORATION
The TRAIN law exempted association dues, membership fees, and other assessments and charges
collected by homeowner’s associations and condominium corporations on a purely reimbursement basis
from business tax.
In the absence of profit-seeking motive as proven by the reimbursement-type assessments of its
members, the home owner’s or condominium associations cannot be said to be businesses. However, if
it is being operated as if it sells its services to its members from which it derives a mark-up and profit,
then it is a taxable business.
LEASE PASSENGER OR CARGO VESSELS AND AIRCRAFTS, INCLUDING ENGINE EQUIPMENT AND SPARE
PARTS THEREOF FOR DOMESTIC OR INTERNATIONAL TRANSPORT OPERATIONS
Illustration
DXY Enterprise imports, sells and leases air and water crafts. During the quarter, it had the following
transactions:
Import sales Lease rentals
yacht 2,000,000 3,000,000 500,000
tanker 20,000,000 25,000,000 800,000
Roll on roll-off boat 4,000,000 6,000,000 600,000
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Fishing boat 2,400,000 3,600,000 300,000
Cargo plane 50,000,000 70,000,000 2,500,000
Private jets 40,000,000 50,000,000 4,000,000
Tax status:
Import sales Lease rentals
yacht
tanker
Roll on roll-off boat
Fishing boat
Cargo plane
Private jets
REGIONAL AREA HEADQUARTERS
-A regional area headquarters is not a separate business or a branch, but an administrative office which
does not derive income on its own; hence, it is not subject to business tax. However, a regional
operating headquarters is taxable.
Illustration 1
A representative office of Institu Company, a corporation established in the Netherlands, is based in
Baguio City. The office coordinates activities of branches and subsidiaries of Institu Company across Asia.
Institu Company subsidizes the Philippine office by transferring P2,000,000 monthly to cover
administrative expenses.
Exempt sales_________________
Illustration 2
Assume the same information , except that the Philippine office is a research office. Research output
are sold by the Philippine office to its affiliates and subsidiaries of Institu in the Philippines and Asia.
Exempt sales____________
TRANSPORT OF PASSENGERS BY INTERNATIONAL CARRIERS
Receipts from the transport of passengers by international carriers originating from the Philippines is
now exempt.
International carriers are air carriers or shipping carriers owned by resident foreign corporation doing
business in the Philippines
Illustration 1
Singapore airlines, an international carrier, had the following receipts during a month:
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From passenger From cargoes Total
Outgoing flights 32,000,000 7,000,000 39,000,000
Incoming flights 41,000,000 18,000,000 59,000,000
Total 73,000,000 25,000,000 98,000,000
Exempt receipts_____________
Illustration 2
JDC Airlines, a domestic carrier with international operations , reported P20M receipts from outgoing
flights, P10M from incoming flights and P90M from domestic flights during the month:
Tax treatment:
1. Receipts from outgoing flights-
2. Receipts from incoming flights-
3. Receipts from domestic flights-
SERVICES OF PRINTERS AND PUBLISHERS
Illustration 1
Cor Company publishes a weekly newspaper. During the month, it had the following receipts:
Sale of newspapers P500,000
Fees from advertisements 300,000
Rent from lessees of vacant spaces 50,000
Exempt sales__________
SALE OF SERVICE TO SENIOR CITIZENS AND PERSONS WITH DISABILITY
SCs and PWDs are exempt from VAT on essential services provided by the following covered
establishment;
1. Lodging establishment (excluding long-term residency arrangements)
2. Hospital and clinic
3. Sports and recreation centers
4. Restaurants
5. Land, air and sea travel
6. Medical, dental, diagnostic, and lab fees and professional medical fees
7. Funeral or burial services
Illustration 1
A medical doctor had the following clients and gross service fees:
Patients Professional fees Medicine sales
Senior citizens 18,000 70,000
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Persons with disability 12,000 40,000
Minor patients 10,000 28,000
Adult patients 24,000 42,000
Exempt receipts:
Patients Professional fees Medicine sales
Senior citizens
Persons with disability
Minor patients
Adult patients
Illustration 2
TLC Lechon, a non-VAT registered, seller of roasted chicken, decide to add a small space for dine-in
service to cater for customer demand. It had the following receipts and sales for the month:
Patients Dine-in receipts Take-out sales
Senior citizens 8,000 40,000
Persons with disability 2,000 12,000
Other customers 14,000 240,000
Exempt receipts:
Patients Dine-in receipts Take-out sales
Senior citizens
Persons with disability
Other customers
Illustration 3
A beautiful young lady is presenting a senior citizen ID card for the purchase of foods for herself and her
friends.
Exempt sale?______________
RECORDING OF SALES TO SENIOR CITIZENS AND PWDS
Cash/receivable xxx
Senior citizen/PWD discount xxx
Sales xxx
Illustration 1
A Vat registered restaurant sold food and beverages totaling P2,240 to a senior citizen who presented a
senior citizen ID card. The senior citizen was accompanies by three other non-senior citizens.
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The amount to be billed shall be computed as follows:
Invoice price to senior citizen P560
Less:output VAT to senior citizens 60
Sales to senior citizens 500
Less: SC discount 100
Net amount due from senior citizen 400
Sales to non-senior citizen 1,680
Total amount to bill 2,080
Illustration 2
Assuming the same facts except that the restaurant is a non-VAT taxpayer, the amount to be billed shall
be
Total sales 2,240
Less;senior citizen discount 112
Amount due 2,128
SALES OF GOODS OR SERVICE COVERED BY SPECIAL LAWS
1. Sales by ecozone locators
-ecozone locators are subject to a special 5% gross income tax, in lieu of all taxes national or
local. As such they are not subject to VAT or percentage tax.s
2. Receipts of proprietors of theaters or cinemas
-LGUs has the exclusive power to impose business taxes on gross receipts of cinemas or
theaters. Therefore, they are not subject to VAT or percentage tax
-lease of motion pictures, films, tapes and discs is vatable.
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