VAT Calculator Philippines 2026

How this is computed

VAT is 12% of the VAT-exclusive price. Adding it is a multiplication by 1.12. Pulling it back out of a price that already contains it is a division by 1.12 — the VAT is 12/112 of the total, roughly 10.71%, not 12%. That one slip is the most common error on a Philippine invoice.

What you remit is output tax less input tax. You collect 12% on your sales and you paid 12% on your VAT-able purchases; only the difference goes to the BIR. For a merchandiser buying stock from VAT-registered suppliers, input tax is large, and the remittance ends up tracking gross margin rather than revenue. When input exceeds output, the excess carries forward to the next quarter — it is not refunded in cash outside the zero-rated and deregistration cases.

Registration is mandatory past ₱ 3,000,000.00 of gross sales in any twelve-month period, and is also required prospectively once there are reasonable grounds to believe you will exceed it. Below that line you pay the 3% percentage tax under Sec. 116 instead, or elect the 8% flat income tax which replaces it.

For the journal entries behind all of this — how input VAT stays out of inventory cost, and what the quarter-end closing entry looks like — read VAT Accounting for Merchandising Sales. To decide whether to register at all, see VAT vs Non-VAT Registration.

Quick Answers to Common Questions

How do I get the VAT out of a ₱1,120 receipt?▼

Divide by 1.12. The base is ₱1,000 and the VAT is ₱120. Multiplying ₱1,120 by 12% gives ₱134.40, which is wrong — that treats the tag price as if it were the tax base.

Can I claim input VAT on purchases from a non-VAT supplier?▼

No. There is no VAT on that purchase to claim, and no VAT invoice to support it. The whole amount is simply cost. This is why VAT-registered buyers often prefer VAT-registered suppliers.

Is input VAT part of my inventory cost?▼

Not if you're VAT-registered — it's a creditable asset, recorded separately from Merchandise Inventory. If you're not VAT-registered, the VAT you paid is unrecoverable and does form part of inventory cost.

What if my input VAT is bigger than my output VAT?▼

You owe nothing that quarter and the excess carries forward indefinitely against future output tax. A cash refund is only available for zero-rated sales or on cancellation of registration, under Sec. 112.

Do I still file monthly?▼

No. Since January 2023 the TRAIN Law's Sec. 114(A) amendment made VAT a quarterly-only filing — Form 2550Q, due within 25 days after the close of the quarter. The monthly 2550M still exists but is optional.

Does a discount reduce my output VAT?▼

Only if it's shown on the invoice at the time of sale and doesn't depend on a later condition. A cash discount a customer earns by paying early — 2/10, n/30 — doesn't reduce the tax base, because the sale was already invoiced at the gross figure.