If you run a small business or freelance in the Philippines, one question comes up early: do I charge VAT on my invoices? The answer depends on how much you earn and how you registered with the BIR.
The 12% VAT rate
The standard VAT rate in the Philippines is 12%. If you are VAT-registered, you add 12% to your sales and pass it to the Bureau of Internal Revenue (BIR) each quarter, after deducting the VAT you paid on your own business purchases.
The ₱3 million threshold
You must register for VAT once your gross sales go over ₱3,000,000 in any 12-month period. Below that, VAT registration is generally optional.
Not VAT-registered? Percentage tax or the 8% option
- 3% percentage tax: most non-VAT businesses pay this on gross sales, filed quarterly.
- 8% flat income tax: self-employed people and professionals under ₱3M can choose this instead of graduated income tax plus percentage tax. The first ₱250,000 of gross receipts is exempt from it.
Check which applies to you with the BIR or an accountant before you choose.
What to show on a Philippine invoice
- Your business name and address
- Your TIN (Tax Identification Number)
- Whether you are VAT-registered or non-VAT
- The VAT amount shown separately, if you are VAT-registered
- Your customer's name and details
Zero-rated and exempt sales
Some sales, such as qualifying exports, are zero-rated, meaning 0% VAT but still reported. Other sales are VAT-exempt. These are treated differently on your returns.
Make invoicing simpler
MyBillDash lets you set your tax name and rate, add your TIN, and send clear invoices in pesos. Set your rate once and every invoice uses it.
This article is general information, not tax advice. Confirm current rates and rules with the BIR or a registered accountant.