VAT Calculator Philippines 2026
Quickly add or remove the 12% Philippine VAT from any amount. Works for prices on receipts, invoices, dealer quotes, and BIR Form 2550 computations. Includes VAT-exempt and zero-rated guidance.
Breakdown
How VAT works in the Philippines
Value-Added Tax (VAT) is the indirect tax imposed on most goods and services sold or imported in the Philippines. It’s collected at 12% of the selling price by VAT-registered businesses and remitted to the Bureau of Internal Revenue (BIR) every month and quarter via BIR Forms 2550M and 2550Q.
Even though the business charges the VAT, the cost is ultimately passed on to you — the end consumer. That’s why understanding how to compute VAT matters whether you’re a business owner pricing your services, a freelancer issuing receipts, or just a regular buyer trying to figure out if a quoted price is “VAT inclusive” or not.
The two ways to compute VAT
There are two common scenarios:
- Add VAT (net → gross): You know the price before VAT and want to know the final selling price. Multiply by 1.12.
- Extract VAT (gross → net): You see a “VAT inclusive” price and want to know how much of it is VAT and how much is the actual cost. Divide by 1.12.
Who needs to charge VAT?
Under the Tax Code as amended by the TRAIN Law (RA 10963) and CREATE Law (RA 11534):
- VAT-registered businesses — anyone whose annual gross sales exceed the VAT threshold of ₱3,000,000 must register for VAT and charge 12% on taxable sales
- Non-VAT (Percentage Tax) businesses — those below the ₱3M threshold may opt to register as Non-VAT and pay 3% Percentage Tax instead (see Section 116 of the Tax Code)
- Importers — VAT is collected at the port of entry on imported goods regardless of business size
- Optional VAT registration — even small businesses below ₱3M can voluntarily register as VAT to claim input VAT credits
VAT-registered vs Non-VAT — which is better?
If your business mostly sells to other VAT-registered businesses (B2B), being VAT-registered is often better because your buyers can claim the VAT you charge as input VAT — meaning your price is effectively the same to them either way, and you in turn get to claim VAT on your own purchases.
If you sell mostly to end consumers (B2C) or to fellow small businesses who can’t claim input VAT, Non-VAT (3% Percentage Tax) is usually simpler and lighter on your customers.
VAT-exempt items in the Philippines
Some goods and services are exempt from VAT entirely. The major categories include:
This list isn’t exhaustive — Section 109 of the Tax Code contains the full enumeration. When in doubt, ask your accountant or check the BIR’s official VAT-exempt list.
Zero-rated VAT (0%)
Zero-rated VAT is different from VAT-exempt. A zero-rated transaction is still subject to VAT — but at 0% — which means the seller can still claim input VAT credits and refunds on their purchases. The classic zero-rated transactions are:
- Export sales (goods sold to buyers outside the Philippines)
- Services to non-residents paid in foreign currency
- Sales to international shipping or air transport operations
- Effectively zero-rated sales to PEZA-registered enterprises and other special economic zones
Senior Citizen and PWD VAT exemption
Under RA 9994 (Senior Citizens Act) and RA 10754 (PWD Act), senior citizens (60+) and persons with disabilities are entitled to a 20% discount and VAT exemption on:
- Medical and dental services, including diagnostic and laboratory fees
- Purchase of medicines (with valid prescription)
- Domestic air, sea, and land transportation
- Hotels, restaurants, and recreation centers
- Funeral and burial services
For these purchases, the correct computation is: Net Price = (Gross ÷ 1.12) × 0.80. The 20% discount is applied to the VAT-exclusive amount, not the VAT-inclusive amount.
VAT on official receipts and invoices
For VAT-registered businesses, every receipt must show:
- The seller’s name, TIN, and address
- The buyer’s TIN (for B2B transactions over ₱1,000)
- A clear breakdown of Vatable Sales, VAT-Exempt Sales, and Zero-Rated Sales
- The 12% VAT computed on vatable sales, shown separately
- The total amount due (vatable + VAT + exempt + zero-rated)
If a receipt or invoice doesn’t break down the VAT separately, the law presumes the total is VAT-inclusive (12% within the total), which is what our Extract VAT mode handles.
Worked examples
Example 1: Pricing a service (Add VAT)
You’re a VAT-registered freelance designer and want to quote a client ₱50,000 net of VAT. The invoice should read:
- Net (Vatable Sales): ₱50,000
- VAT (12%): ₱6,000
- Total: ₱56,000
Example 2: Restaurant bill (Extract VAT)
Your dinner total is ₱2,800 (VAT-inclusive). To find the VAT-exclusive amount:
- Net amount: ₱2,800 ÷ 1.12 = ₱2,500
- VAT (12% of ₱2,500): ₱300
- Check: ₱2,500 + ₱300 = ₱2,800 ✓
Example 3: Senior citizen discount
A senior orders food worth ₱1,120 (VAT-inclusive). Correct computation:
- VAT-exclusive amount: ₱1,120 ÷ 1.12 = ₱1,000
- Less 20% senior discount: ₱1,000 × 0.80 = ₱800
- Senior pays: ₱800 (no VAT added; senior is VAT-exempt on this purchase)
Frequently asked questions
What is the VAT rate in the Philippines in 2026?
The standard VAT rate in the Philippines is 12%, set by the Tax Code as amended by the TRAIN Law (RA 10963). This rate applies to most goods and services sold by VAT-registered businesses. There is no reduced rate, only the 0% zero-rated category for exports and certain other transactions.
How do I compute VAT-exclusive price from a VAT-inclusive total?
Divide the VAT-inclusive total by 1.12. For example, ₱1,120 VAT-inclusive ÷ 1.12 = ₱1,000 VAT-exclusive. The VAT portion is ₱120. The most common mistake is multiplying the VAT-inclusive price by 0.12 to get VAT — that gives the wrong answer because the 12% would apply to a base that already includes VAT.
What’s the difference between VAT and Percentage Tax?
VAT (12%) is collected by businesses with annual gross sales above ₱3,000,000. Percentage Tax (3% under Section 116 of the Tax Code) applies to Non-VAT businesses below the ₱3M threshold. The major difference: VAT lets you claim input VAT credits on your purchases; Percentage Tax doesn’t. For B2B sellers, VAT is often better. For small B2C sellers, Non-VAT/Percentage Tax is usually simpler.
Do I have to pay VAT on my groceries?
It depends on the item. Raw, unprocessed agricultural and marine food products — fresh meat, fish, fruits, vegetables, eggs, rice — are VAT-exempt. Processed food — canned goods, snacks, beverages, frozen meals — is subject to 12% VAT. Your supermarket receipt should show a separate line for “VAT-Exempt Sales” alongside “Vatable Sales”.
Can a customer claim back VAT in the Philippines?
Regular consumers cannot claim VAT refunds. Only VAT-registered businesses can claim input VAT credits — by deducting the VAT they paid on purchases from the VAT they collected on sales. End consumers shoulder the full 12%. The exceptions are foreign tourists shopping at accredited stores (limited refund scheme via the Tourist VAT Refund implementing rules), senior citizens, and PWDs.
Is VAT charged on online purchases from Shopee or Lazada?
Yes, if the seller is VAT-registered or if the platform itself acts as the seller. Most large e-commerce platforms in the Philippines now show VAT-inclusive prices by default. Beginning 2024, foreign digital service providers (Netflix, Spotify, Amazon, etc.) also collect 12% VAT under RA 12023 (Digital Services VAT Law). Local third-party sellers below the ₱3M threshold may still be Non-VAT and only charge 3% Percentage Tax.
What happens if a business charges VAT but isn’t VAT-registered?
That’s illegal. Only businesses with a BIR Certificate of Registration showing they’re VAT-registered can charge VAT. If a Non-VAT business charges you 12% VAT, they’re committing tax fraud — they’re collecting tax money they have no right to remit. You can report this to the BIR by submitting a complaint at the nearest RDO. Always check the seller’s official receipt for a TIN and the words “VAT Registered” or “Non-VAT”.
How often do VAT-registered businesses file VAT returns?
VAT returns are filed both monthly and quarterly: BIR Form 2550M (Monthly VAT Declaration) is due within 20 days after the close of each month, and BIR Form 2550Q (Quarterly VAT Return) is due within 25 days after the close of each quarter. Most businesses file electronically through eFPS or eBIRForms. Late filing incurs surcharges, interest, and compromise penalties.