How to compute Percentage Tax in the Philippines

October 22, 2009 by  
Filed under Taxation

percentage-taxThis article aims to guide businessmen and professionals in computing their percentage tax payable to the BIR. Your humble friend here is also subject to percentage tax. Accordingly, I’m also paying percentage tax every month aside from quarterly and annual income tax payables. Percentage tax, like Value Added Tax (VAT), is also considered as a business tax rather than an income tax. This means that whether you generate income or incur a loss, as long as you have sales or revenue, you must pay a percentage tax. This is because business taxes are taxes based on gross sales or receipts rather than based on net income (before income tax).

What is percentage tax?

Percentage tax is a business tax imposed on persons or entities who sell or lease goods, properties or services in the course of trade or business whose gross annual sales and/or receipts do not exceed P1,500,000 and who are not VAT-registered.

 

Who are required to pay and/or file?

The following persons are required to pay and or file percentage tax.

A. Required to pay and file Monthly Percentage Tax Return (BIR Form 2551M)

1. Any person who is not a VAT-registered person (persons exempt from VAT under Sec. 109z of the Tax Code)

2. Domestic carriers and keepers of garages, except owners of bancas and owners of animal drawn two- wheeled vehicle.

3. Operators of international air and shipping carriers doing business in the Philippines.

4. Franchise grantees of electric, gas or water utilities

5. Franchise grantees of radio and/or television broadcasting companies whose gross annual receipts for the preceding year do not exceed Ten Million Pesos (P 10,000,000.00) and did not opt to register as VAT taxpayers.

6. Banks and non-bank financial intermediaries and finance companies

7. Life insurance premiums

8. Agents of foreign insurance companies

B. Required to pay and file Quarterly Percentage Tax Return (BIR Form 2551Q)

9. Operators of communication equipment sending overseas dispatch, messages, or conversations from the Philippines, except on services involving the following:

  a. Government of the Philippines – for messages transmitted by the Government of the Republic of the Philippines or   any of its political subdivisions and instrumentalities

  b. Diplomatic services – for messages transmitted by any embassy and consular offices of a foreign government

  c. International organizations – for messages transmitted by a public international organization or any of its agencies based in the Philippines enjoying privileges, exemptions and immunities which the government of the Philippine is committed to recognize pursuant to an international agreement

  d. News Services – for messages from any newspaper, press association, radio or television newspaper broadcasting agency, or newsticker services to any other newspaper, press association, radio or television, newspaper,  broadcasting agency or newsticker services, or to bonafide correspondents, which messages deal exclusively with the collection of news items for, or the dissemination of news items through public press, radio or television broadcasting or a newsticker service furnishing a general news service similar to that of the public press

10. Proprietor, lessee, or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, jai-alai and race tracks

C. Required to pay and file Percentage Tax Return (BIR Form 2552)

11. Every stock broker who effected a sale, barter, exchange or other disposition of shares of stock listed and traded through the Local Stock Exchange (LSE) other than the sale by a dealer in securities

12. Corporate issuer / stock broker, whether domestic of foreign, engaged in the sale, barter, exchange or other disposition through Initial Public Offering (IPO) seller in secondary public offering of shares of stock in closely held corporations

D. Required to pay and file Percentage Tax Return (BIR Form 2553)

13.  All taxpayers liable to pay percentage tax under special laws.

 

How to compute?

To clearly understand how to compute and prepare the percentage tax returns to be filed with the BIR, please download first the following links to percentage tax return forms. To determine what form is applicable to you, please read carefully the preceding paragraphs on “who are required to pay”. Once you determine where you belong, you can now click and download the right form for you. The following are the bases and rates in computing percentage tax for each type of taxpayers.

1. BIR form 2551M – Monthly Percentage tax return (Pls. click to download form)

Since I’m a professional who belongs to persons exempt from VAT under Sec. 109v (Sec.116), this return is what I’m filing and paying every month. Below are the tax rates for each type of taxpayer. In my case, I am paying 3% of my monthly gross revenue / receipts with the BIR or authorized bank agent. Percentage tax is based on gross sales, receipts or earnings except on insurance companies where the basis of tax is the total premium collected/paid. This means you just need to multiply your gross sales, receipts or earning, premium collected by the tax rate applicable to you to arrive at total tax due. Then it should be reduced by (a) creditable percentage tax withheld per BIR form no. 2307 and (b) tax paid in return previously file, if you are filing for an amended return. Assuming there are no penalties (surcharge, interest and compromise), you will already be able to compute your total tax payable.

 2551M-rate1

2551M-rate2

PT means percentage tax while ATC means Alphanumeric Tax Code.

2. BIR form 2551Q – Quarterly Percentage tax return (Pls. click to download form)

If you or your company belongs to the second group and is required to pay and file BIR form 2551Q, the following are the rates in computing the tax due:

2551Q-rate-a

2551Q-rate-b

The tax due is based on gross receipts. For the purpose of the amusement tax, the term “gross receipts” embraces all the receipts of the proprietor, lessee or operator of the amusement place. Said gross receipts also include income from television, radio and motion picture rights if any. To arrive at the total amount tax payable, the tax due must also be reduced by creditable taxes and previous payments and increased by penalties, if any (same with the 2551M).

3. BIR form 2552 – For transactions involving shares of stock listed and traded through the Local Stock Exchange or through Initial and /or Secondary Offering (Pls. click to download form)

This return should be filed by the following with their corresponding rates:

a. Every stock broker, who effected a sale, barter, exchange or other disposition of shares of stock listed and traded through the Local Stock Exchange (LSE) other than the sale by a dealer in securities, subject to a tax rate of one-half of one percent (1/2 of 1%) of the gross selling price or gross value in money of the stock sold, bartered or exchanged or otherwise disposed, which tax shall be shouldered by the seller or transferor.

b. A corporate issuer, engaged in the sale, exchange or other disposition through Initial Public Offering (IPO) of shares of stock in closely-held corporation at the rates provided hereunder based on the gross selling price or gross value in money of the shares of stock sold, bartered, exchanges or otherwise disposed in accordance with the proportion of shares of stock sold, bartered, exchanged or other wise disposed to the total outstanding shares of stock after the listing in the local stock exchange:

          Up to 25%                                  4%

          Over 25% but not over 33 1/3%     2%

          Over 33 1/3%                              1%

c. A stock broker who effected a sale, exchange or other disposition through secondary public offering of shares of stock in closely-held corporations at the rates provided hereunder based on the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed in accordance with the proportion of shares of stock sold, bartered, exchanged or otherwise disposed to the total outstanding shares of stock after the listing in the local stock exchange:

After you have computed your percentage due, it must also, if applicable, be deducted by creditable taxes and previous payments and added by penalties, if any (same with the last two returns).

4. BIR form 2553 – Return of Percentage tax payable under special laws (Pls. click to download form)

This return is filed by all taxpayers liable to pay percentage tax under Special Laws.

 

When to and where to file?

1. Monthly Percentage Tax Return – BIR Form No. 2551M

The return shall be filed not later than the 20th day following the end of each month. Any person retiring from a business subject to percentage taxes shall notify the nearest Revenue District Office, file his return and pay the tax due thereon within twenty (20) days after closing his business.

The return shall be filed with any Authorized Agent Bank (AAB) within the territorial jurisdiction of the Revenue District Office where the taxpayer is required to register/conducting business.  In places where there are no AABs, the return shall be filed with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer within the Revenue District Office where the taxpayer is required to register/conducting business.

A taxpayer may, at his option, file a separate return for the head office and for each branch or place of business or a consolidated return for the head office and all the branches except in the case of large taxpayers where only one consolidated return is required.

2. Quarterly Percentage Tax Return – BIR Form No. 2551Q

The return shall be filed within twenty (20) days after the end of  each quarter,  provided, however, that with respect to taxpayers enrolled with  the Electronic Filing and Payment System (EFPS),  the deadline for e-filing  and e-paying the tax due thereon shall be five (5) days later than the deadline set above. Any person retiring from a business subject to percentage taxes shall notify the nearest Revenue District Office, file his return and pay the tax due thereon within twenty (20) days after closing his business.

The return shall be filed with any Authorized Agent Bank (AAB) within the territorial jurisdiction of the Revenue District Office where the taxpayer is required to register/conducting business.  In places where there are no AABs, the return shall be filed with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer within the Revenue District Office where the taxpayer is required to register/conducting business.

A taxpayer may, at his option, file a separate return for the head office and for each branch or place of business or a consolidated return for the head office and all the branches or place of business except in the case of large taxpayers where only one consolidated return is required.

3. Percentage Tax Return – BIR Form No. 2552

This return shall be filed as follows:

a. For tax on sale of shares of stock listed and traded through the Local Stock Exchange (LSE), within five (5) banking days from date of collection.

b. For shares of stocks sold exchanged through primary public offering, within thirty (30) days from date of listing of shares of stock in the LSE; and

c. For tax on shares of sold or exchanged through secondary public offering, within five (5) banking days from date of collection.

The return shall be filed with any Authorized Agent Bank (AAB) located within the jurisdiction of the Revenue District (RDO) where the Local Stock Exchange is located.

A stockholder or corporate issuer, in addition to BIR 2552, is required to submit on Monday of each week to the Secretary of the Stock Exchange, of which he is a member, a true and complete return which shall contain a declaration of all the transactions effected through him during the preceding week and of taxes collected by him and turned over to the Bureau of Internal Revenue.

4. Return of Percentage Tax Payable under Special Laws – BIR Form No. 2553

Upon filing this return, the total amount payable shall be paid to the Authorized Agen Bank (AAB) where the return is files. In places where there are no AABs, payment shall be made directly to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer who shall issue a revenue Official Receipt (BIR Form No. 2524) therefore.

For more detailed information on the filing and payment of percentage tax, including the attachments required and the computation of penalties, you may refer directly to the BIR forms. Links to the BIR download pages are provided above. In the forms, specifically on the last pages, information like rates, deadlines, procedures, attachments and computation of penalties on percentage tax are stated. If you have questions and clarifications, feel free to comment below. We will try our best to answer them. We also encourage our readers who have something to share on this matter. Now that you’ve been told, do what is right. God bless to everyone.

Source:

Bureau of Internal Revenue

Bureau of Internal Revenue VAT/Percentage tax Forms

Comments

29 Responses to “How to compute Percentage Tax in the Philippines”
  1. mizpah says:

    I find How to computer personal tax very informative. I read that persons exempt from VAT under Sec. 109z of the Tax Code is P550,000 or less gross income. But in the BIR website, it is P750,000 gross income. Which one is the right amount to use for exemption from VAT under Sec. 109z of the tax code.

  2. viclogic says:

    Hi Mizpah,

    Thank you for visiting.
    Republic Act No. 9337 which took effect on July 1, 2005 further amended Sec. 109 of the National Internal Revenue Code of 1997, as amended. Section 7-v of RA 9337 stated that:

    “(V) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the amount of One million five hundred thousand pesos (P1,500,000): Provided, That not later than January 31, 2009 and every three (3) years thereafter, the amount herein stated shall be adjusted to its present value using the Consumer Price Index as published by the National Statistics Office (NSO);

  3. mizpah says:

    Thank you for your immediate reply and answer to my question. I greatly appreciate it. Best regards.

  4. Raymond Cruz says:

    Good Day,

    I'd like to know how to compute royalty fees on someone who is using my receipts.
    If i understood correct, should it fall on PT 103 with 7% witholding tax?
    Does this mean that if they issue a receipt of P10,000, i should ask from them P700 as royalty fee?

    Thank you very much for your time….

    Regards

  5. salon2009 says:

    Hello,hope you can help me answer this tax question.I am renting a space in paranaque for 20k/month.The buildong owner said to pay her total of 21k for tax and she will refund it to me after 12 months.In my understanding,she will refund me total of 12k at the end of the year.Question is, what is that tax fee for?should it be the lessor should pay the tax since that rental is really her income?pls reply.thanks.

  6. viclogic says:

    Hi Salon2009,

    First of all, a lease agreement should be evidenced by a contract of lease. There, the stipulations are stated (e.g., fee, terms, tax, etc). Assuming you are renting for business purposes, you, as a lessee is required by BIR to withhold (5%) witholding tax on income payments from rental fee. You are right in saying that the lessor is the one who earns income, and the one who is liable to BIR an income tax. That's why the BIR requires lessee to deduct a 5% withholding tax on monthly rent income that you will pay to the lessor. To make this clear, let us say for example, your gross monthly rent is 20,000. You should withhold 5% of it (1,000) and remit monthly to BIR using BIR form 1601E as discussed in my previous answers on the previous questions. Thus, you will only pay the lessor an amount of P19,000, which is net of 1,000 withholding tax (remitted to BIR). The lessor, in return will ask you for the certificate of withholing tax, which he will use to claim against his Income tax when he file and pay it to the BIR.

    I just don't know what is the reason of the additional 1,000 your lessor is charging you every month. It can be an allowance to cover the tax that will be incurred by the lessor. Or it can be another allowance which can be returned to you after a period of time. I would recommend reading and examining your contract of lease with your lessor to determine the clear stipulations stated in there, and find out if they are fair and square.

  7. ann lee says:

    hi! do you have any idea on the witholding tax for doctors who are non-vat? our health partner is deducting 15% witholding tax prior to sharing of income. is this right or are they deducting too much?i hope to hear from you. thanks.

  8. terryvillegas says:

    hi…thanks for informative posts… id like to know po, if Percentage tax payments are deductible as a tax credit or payment in your quarterly income tax or Annual ITR? if yes, what item should it be included? I understand that Item 38K of Quarterly ITR refers to payments made with BIR Form no. 0605 (excluding Percentage Tax Payments… thanks for your time. :-)

  9. viclogic says:

    Hi Ann Lee,

    Please be guided by the following rates of withholding medical professionals:

    EWT- payments to medical practitioners by a duly registered professional partnership
    -if the current year's income payments for the medical practitioner is P720,000 and below = 10%
    -if the current year's income payments for the medical practitioner exceed P720,000 =15%
    EWT- payments for medical/dental /veterinary services thru hospitals/clinics/
    EWT- payment by the general professional partnership (GPP) to its partners
    -if the current year's income payments for the partner is P720,000 and below = 10%
    -if the current year's income payments for the partner exceed P720,000 = 15%

    For complete table of the rates please go to the following link and download BIR form 1601-E to see the reference of the above table:
    http://www.bir.gov.ph/birforms/form_pay.htm

  10. viclogic says:

    Hi Terry Villegas,

    SEC. 34. Deductions from Gross Income

    (C) Taxes.-

    (1) In General. – Taxes paid or incurred within the taxable year in connection with the taxpayer's profession, trade or business, shall be allowed as deduction, except

    (a) The income tax provided for under this Title;

    (b) Income taxes imposed by authority of any foreign country; but this deduction shall be allowed in the case of a taxpayer who does not signify in his return his desire to have to any extent the benefits of paragraph (3) of this subsection (relating to credits for taxes of foreign countries);

    (c) Estate and donor's taxes; and

    (d) Taxes assessed against local benefits of a kind tending to increase the value of the property assessed.

    Provided, That taxes allowed under this Subsection, when refunded or credited, shall be included as part of gross income in the year of receipt to the extent of the income tax benefit of said deduction.

    ——This means Percentage tax, together with excise taxes, documentary stamp taxes, local taxes and import dues are deductible as taxes from your gross income. VAT, estate tax, donors tax are not deductible. VAT is a tax imposed on the consumers not on the taxpayer and estate and donor tax are clearly exempted by the code as enumerated above.

    Tip: Make sure that the basis of your monthly percentage tax which is your monthly gross sales tallies to your total sales for the quarter in your quarterly income tax and total annual sales in your annual income tax.

  11. pmikaellaarleen says:

    Hi,, please help me with my problem,,, as a taxpayer am i obliged to pay my monthly income tax return eventhough my gross sales is only P182,500.. can i get my money back for 11 months of paying 500.00 to the BIR? please answer..

  12. viclogic says:

    Hi pmikaellaarleen,

    - Your gross sales of 182,500 is monthly, quarterly or annual?
    - Are you fully earning from your business? Or are you also earning from employment?
    - What is that P500 that you are paying to the BIR monthly?
    - Are you VAT or non VAT registered?
    - Are you paying monthly VAT or percentage tax.

    Please make a clear question so we can help you.

  13. pmikaellaarleen says:

    Thank u for your reply sir..

    I have no employees, im the only one who handled this bussiness which is an internet cafe,, as listed in my bussiness permit application form, i have 10 units of computer and my gross sales a day is only 400,, my annual gross sales is 140,000. And i am not VAT registered..

    QUESTION:
    Am i required to pay MONTHLY PERCENTAGE TAX RETURN every month?

    Last 2008 i am paying 500 to the BIR for my monthly percentage tax return,, from the month of february until december.. When they require me to pay my annual income tax return and my quarterly income tax return for the year 2008, I already stop paying to the BIR,, i dont know where to get money and my income is very small,, for the whole year of 2009 i am not paying my monthly percentage tax return,, i only pay 500 to the payment form they gave to me when i renew my bussiness permit.. Now that im renewing again my bussiness permit for 2010 im already afraid to go the BIR,, they might ask me for my pending fees for 2009…

    Am i obliged to pay 500 for monthly percentage income tax return in the BIR? If the answer is NO can i get my money back for 11 months of paying 500 to the BIR for the year of 2008…

    PLEASE ANSWER…

  14. viclogic says:

    Hi,

    If your gross sales per month average Php12,000 (as assumed), and you're not VAT-registered person, you should pay monthly percentage tax of Php 360.00 (3% of Php12,000). If you are registered with the BIR, you should have a BIR Certificate of Registration BIR Form 2303. There you can see the taxes you must pay or file monthly, quarterly and annually.

    Since you have not paid monthly percentage taxes for the whole year 2009, you are now liable to BIR for the unpaid monthly percentage taxes due during 2009. Your remedy is to go to a BIR examiner and let him/her compute your unpaid percentage taxes – estimated to be [(Php360 x 12months)] + compromise + surcharge + interest).

    The sum total of your monthly gross sales for 2009 which are the bases for monthly computing of percentage taxes (monthly gross sales x 3%), must tally with the gross sales reported in you annual income tax for 2009.

    Please take note that Gross sales is your total sales before deducting cost of sales and expenses, as contrast to gross income and net income.

    BTW, if you have 10 computers in your Internet Cafe, and let us say, you are charging Php10 per hour, and your opening 10 hours a day, why are you only generating gross revenue of Php400 per day? Also, don't you have any source of income aside from Internet renting (e.g., printing, snacks, etc.)? :)

  15. pmikaellaarleen says:

    Hi,

    Now i know.. Thanks a lot.. This site is such a big help..

  16. bavygail says:

    Pleasant Day!
    First of all, I would just like to thank you for having this very informative site. Hope you could assist me with my inquiry about taxes. We had a property being leased, and on the contract It states that it'll be rented 31,240 – when we recieve the check, it already deducted 5% – having 29,678 net,- Would this mean they are the ones who'll pay BIR the Monthly percentage tax Return?. How about the Quarterly and Annual Income Tax Return? How can I compute it? or is this on top of the Monthly Percentage Tax return? Hope you could advise me on this.. Thanks.. this would help us a lot.. Its our first time to have our property for lease.. thanks!

  17. Victorino says:

    Hi bavygail,

    No, they are not paying percentage tax – they are remitting 5% of the income payments as monthly withholding tax (BIR Form 1601-E) to BIR. You still need to pay monthly percentage tax (BIR form 2551M), which is 3% of your gross receipts/revenues (since you are a non-VAT registered person). In addition, you should also pay you quarterly income tax and annual income tax accordingly. Check your BIR certificate of Registration for your taxability – it's stated there. With regard to the 5% withheld by your tenant, you can ask for certificate of withholding tax (BIR form 2307) for the amounts they withheld in your income. You can claim those amounts against your income tax by attaching these forms in your income tax returns.

  18. bavygail says:

    Thanks for the clarification.. very much appreciated.. :) so since we are recieving 29,678per month from them – we have to pay 3% of it monthly to BIR- using the 2551M , pay quarterly income tax return using 1701Q and Annual Incometax return using 1701. with the amount 29,678.00 monthly we recieve from them, hope you could give me an idea of how much are we going to pay for the annual and quaterly tax return. and for the BIR form 2307-since the already deducting 5% – is there anything we should ask the lessee that we must present to BIR if I'm going to ask for COR -2307? … I didn't knew that having s small property being leased will be this much work with taxes.. and the small rent isn't going to be the net persay :( thank you so much for your advises!-looking forward on your reply on this..

  19. Victorino says:

    Hi, your percentage tax is 3% of your GROSS rental income – meaning 31,240 and not at net. Your tenant who withhold you 5% a month is obliged to give you certificate of withholding tax (BIR form 2307). When you file quarterly income tax and annual income tax – ask these certificates to them so that you can claim these amounts as deduction to you income tax dues. The amount they withhold from you should equal to the amount that will be stated in the certificates.

  20. bavygail says:

    Thanks A lot Vic! really much appreciated!! Its a good thing that the are some people like you left that helps!! Thanks.. :) until further inquiries :)

  21. bavygail says:

    By the way Vic, just one more question – is it legal/right that my lesse deducts an automatic 5% to the contracted amount 31,240? Or I should get the full amount of 31,240 and then pay my dues to BIR? – my apologies, I'm confused of the 5% they are deducting from us if we are still going to pay 3% to BIR..Thanks again in advance for your help.

  22. krekr says:

    hi! thank you for providing us with this very helpful information. im working in a government hospital under a contract of service. and a first-timer in filing for an itr. i was told that i do not have to file becuase the administration was already responsible for it. but some friends (from another government hospital)of the same working status as myself are filing. who should i follow?

  23. justmarrieddoc says:

    Hi. I love your website. Especially in giving information regarding taxes, in filing them, and knowing what t do with the downloaded files from BIR. Personally, i am learning so much especially now its my first time to file as a professional.

    I am affiliated with a clinic and they have given me Form 2307 upon request. Your site explains that i should file an annual ITR even if the Tax Due is less than my Creditable Tax withheld. I believe my Tax due is lesser because of the 50,000 personal exemption for married individuals and the the new optional standard deduction of 40%.

    My question is this, as a professional, just affiliated with a clinic but not an employee:
    1. am I still required to pay monthly percentage tax of 3% (given that i earn <720k per annum)? 2. If so, can we pay for percentage tax for the past year now, on a per annum basis?
    3. Are there any exemptions or deductions for the percentage tax such as being married, etc., like the ones in ITR? I mean is there a way to reduce the percentage tax?

    Please help, I know I have a lot of questions as a first timer. Just need to know. Thanks in advance.

  24. justmarrieddoc says:

    Thanks to your website, now I know how to fill up those ITR forms as this is my first year to file as a professional. However, i have a question still regarding this Percentage tax. Hope you could help me.

    1. As a professional affiliated with a clinic, but not as an employee, am I required to pay for 3% Percentage tax given a <720k annual income?
    2. If yes, can this be paid annually instead of monthly?
    3. Is there a way to decrease this percentage tax such as a personal exemption like being married or acquiring med supplies, or transportation, gas, and other stuff used during the practice as a professional? Or does this apply only to the ITR?

    Please help. I still think that 3% is too much for those who are just starting their business/profession. =(

    p.s.
    one more thing, would you recommend changing the status and transfer registration be done after filing ITR or before so that we can reconcile our ITR? Would it matter?

  25. If i have 7 lac salary package for i year then how much money i have to paid to the department?

  26. I like your Income tax related blog so keep blogging and oblige us..

  27. jekski says:

    please help me! i have a 360,000 gross receipts last january 2010 and 260,000 in february 2010. i have paid a total of 18,600 percentage tax during that two mos. my question is am i automatically subjected to VAT because my first quarter gross receipts is 620,000 which means exceed the ceiling of 550,000.please help…

  28. Homes to buy says:

    They say every two weeks but that is too soon for me so I go in every 3 weeks like clockwork. You will be able to tell when you need to have it done again. The bottom of the acrylic nails will be visible….

  29. Hi Jekski,

    Here is an information from the BIR website. IMO, you should already register as a VAT registered taxpayer at the BIR. The threshold of 1.5M is for a year and not for a quarter. So if you already earn 620T in the first quarter, it is already a reasonable ground that you will have a more than 1.5M sales for this year.

    From the BIR website:
    Who are liable to register as VAT taxpayers?
    Any person who, in the course of trade or business, sells, barters or exchanges goods or properties or engages in the sale or exchange of services shall be liable to register if:

    1. His gross sales or receipts for the past twelve (12) months, other than those that are exempt under Section 109 (A) to (U), have exceeded One Million Five Hundred Thousand Pesos (P1,500,000.00): or
    2. There are reasonable grounds to believe that his gross sales or receipts for the next twelve (12) months, other than those that are exempt under Section 109 (A) to (U), will exceed One Million Five Hundred Thousand Pesos (P1,500,000.00).

    What is the liability of a taxpayer becoming liable to VAT and did not register as such?

    Any person who becomes liable to VAT and fails to register as such shall be liable to pay the output tax as if he is a VAT-registered person, but without the benefit of input tax credits for the period in which he was not properly registered.