VAT Exempt Transactions (TRAIN Law)

VAT-Exempt Transactions (Sec.
109-1)
AGRICULTURE
(a) Sale or importation of:
o Agriculture and marine food products in their original state;
o Livestock and poultry generally used for yielding or producing food
for human consumption; and
o Breeding stock and genetic materials.
(b) Sale or importation of:
o Fertilizers, seeds, seedlings or fingerlings;
o Fish, prawn, livestock or poultry feeds used in manufacturing of
finished feeds.
o Except: specialty feeds for race horses, fighting cocks, zoo animals
and other animals considered as pets.
(f) Services by agricultural contract growers and milling of:
o Palay into rice;
o Corn into grits; and
o Sugar cane into raw sugar.
PERSONAL EFFECTS
(c) Importation of:
o Residents returning to Philippines; and
o Non-resident Citizens resettling in the Philippines.
(d) Importations of professional materials, tools of trade, personal and
household effects, etc. not in commercial quantity of persons coming to
settling in the Philippines, or Filipinos.
Except: Vehicles, vessels, aircraft, machineries, etc. used in production

of any kind in commercial quantity.
RESIDENTIAL DWELLINGS
(p) Sale of:
o Real property not in the ordinary course of business;
o Low-cost housing
(Level 1 – PHP 450,000 to PHP 1,700,000; Level 2 – PHP 1,700,000 to PHP 3,000,000)
o Socialized Housing
(House and lot – PHP 400,000; Lot only – PHP 160,000)
o Residential Lot valued at PHP 1,500,000 and below; PHP 1,919,500 (prior to TRAIN).
o Residential House & Lot at PHP 2,500,000 and below. PHP 3,199,200 (prior to TRAIN).
(q) Lease of residential units
o Monthly rent < PHP 15,000 per unit; or PHP 12,800 per unit regardless
o If monthly rent is > PHP 15,000 per unit, aggregate rent income is < of aggregate (prior to TRAIN).
PHP 3,000,000
INSTITUTIONS
(g) Medical, dental, hospital and veterinary services except those rendered
by professionals.
(h) Educational institutions recognized by DepEd, CHED and TESDA; or
those rendered by gov’t educational institutions.
(r) Sale or importation, printing or publication of books
o at regular intervals;
o at fixed price for subscription and sale; and
o not principally for the purpose of paid advertisement.
(v) Banks, non-banks financial institutions performing quasi-banking
functions, and others (money changers and pawnshops, subject to
Percentage Tax under Sec. 121 and 122).
TRANSPORTATIONS
(s) Transport of passengers by international carriers. Transport of passengers and
cargo by international carriers
(prior to TRAIN).
(t) Sale, importation or lease of passenger or cargo vessels/aircraft
including engine and spare parts for domestic or international transport.
(u) Importation of fuel, goods and supplies by persons engaged in
international transport operations:
o from Philippines to Foreign Country, and vice versa;
o must be uninterrupted.
COOPERATIVES
(l) Sales by agricultural cooperatives
o Sale of their produce to non-members, whether in original state or
not;
o Importation solely and directly for production and processing
produce.
(m) Gross receipts from lending activities by a credit or multi-purpose
cooperative.
VAT-Exempt Transactions (Sec. 109-1)
(n) Sales by non-agricultural, non-electric and non-credit cooperatives –
capital contributions of each member < PHP 15,000, aggregate
notwithstanding.
OTHERS
(j) Services rendered by RHQ (non-operating) in the Philippines.
(e) Subject to OPT.
(i) Services of individuals under employee-employer relationship.
(k) Transactions exempt by special laws and international agreements.
Except: Petroleum Exploration Concessionaires
(o) Export sales by non-VAT registered.
TRAIN ADDITIONS (Seniors-PWD MAG-Drugs)
(w) Sale or lease of goods/properties to Senior citizens or PWD
(x) Transfer of property under Merger and consolidation
(y) Association dues, membership fees and other assessments by
Homeowners Associations and Condominium Corp.
(z) Sale of Gold to BSP. Used to be 0%-rated Sale (prior
to TRAIN).
(aa) Sale of Drugs and medicines for hypertension, high cholesterol and
diabetes (starting January 1, 2019).
CATCH-ALL PROVISION
(bb) o Those not covered by other provisions. Used to be PHP 1,919,500
o Sale of goods/services are exempt if gross annual receipts/sales is (prior to TRAIN).
> PHP 3,000,000.
o If individual with 8% tax on gross sales, exempt from VAT.

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VAT-Exempt Transactions (Sec.

Except: Vehicles, vessels, aircraft, machineries, etc. used in production

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