Finance, Labor & Corporate
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5 Terms
Services Subject to Percentage Tax
Services already subject to non-VAT percentage taxes under Title V of the Tax Code are completely exempt from VAT to avoid double taxation.
Employee Services
Services rendered by individuals to their employers under a legitimate employer-employee relationship are exempt from VAT since they do not constitute an independent business activity.
Regional Headquarters (RHQs)
Services rendered by regional or area headquarters of multinational companies are VAT-exempt, provided they act purely as administrative centers and do not earn income from the Philippines.
Banking & Financial Services
Services rendered by banks, non-bank financial intermediaries, and quasi-banks—including those provided through digital platforms—are VAT-exempt because they are subject to Gross Receipts Tax instead.
Tax-Free Exchanges & Mergers
The transfer of property pursuant to a tax-free exchange, corporate reorganization, or merger under Section 40(C)(2) of the Tax Code is exempt from VAT.