Kodigo Labs ToolsHow to compute VAT in the Philippines
The Philippine value-added tax is 12% of the selling price before tax. Prices you see in stores and on receipts are usually VAT-inclusive, meaning the tax is already part of the price. Choose the mode that matches your number:
- Add VAT if your price does not include VAT yet (for example, a supplier quote “plus VAT”). Gross = net × 1.12.
- Remove / extract VAT if your price already includes VAT (for example, a receipt total). Net = gross ÷ 1.12 and VAT = gross − net.
Worked example
A freelancer quotes ₱50,000 plus VAT. The VAT is ₱50,000 × 12% = ₱6,000, so the client pays ₱56,000. Going the other way, a receipt total of ₱56,000 has a net amount of ₱56,000 ÷ 1.12 = ₱50,000 and VAT of ₱6,000. Notice that 12% of ₱56,000 would be ₱6,720, which is wrong because that number already contains the tax.
VAT-exempt sales
Not every sale has VAT. Sellers who are not VAT-registered (generally those with gross sales of ₱3 million or less a year) do not charge VAT, and some goods and services are VAT-exempt by law, such as many unprocessed agricultural and marine food products, educational services of accredited schools, and certain medicines. If your receipt says “VAT-exempt” or shows zero VAT, there is nothing to extract.
Senior citizen and PWD discount
Senior citizens and persons with disability get a 20% discount and VAT exemption on qualified purchases such as medicines, restaurant meals, and transportation. The discount is computed on the VAT-exclusive price. For a ₱1,120 restaurant bill: remove VAT first (₱1,120 ÷ 1.12 = ₱1,000), then deduct 20% (₱200). The amount to pay is ₱800, a total saving of ₱320. A common mistake is taking 20% off ₱1,120, which gives ₱896. For a group meal, only the senior’s or PWD’s share of the bill gets the discount, so enter just that share. Some purchases (like basic necessities and prime commodities in supermarkets) have a different, smaller discount, so the result here may not apply to them.
Frequently asked questions
What is the VAT rate in the Philippines?
The standard value-added tax rate is 12%. It applies to most sales of goods and services by VAT-registered businesses. Some sales are zero-rated (such as certain export sales) or VAT-exempt.
How do I get the VAT from a VAT-inclusive price?
Divide the price by 1.12 to get the VAT-exclusive (net) amount, then subtract it from the price. A shortcut is price × 12 ÷ 112. For example, ₱1,120 ÷ 1.12 = ₱1,000, so the VAT is ₱120.
Why is VAT not just 12% of the receipt total?
Because the receipt total already includes the VAT. Taking 12% of ₱1,120 gives ₱134.40, which is too much. The correct VAT is ₱120, which is 12% of the ₱1,000 net amount.
How is the senior citizen or PWD discount computed?
For qualified purchases, the sale to a senior citizen or person with disability is VAT-exempt, and the 20% discount is computed on the price without VAT. So the menu price is first divided by 1.12, then 20% is deducted. On a ₱1,120 bill, you pay ₱800, not ₱896.
Can I use this for other countries?
Yes. Change the VAT rate to your country’s rate (for example 5% in the UAE, 15% in Saudi Arabia or 9% GST in Singapore). Everything is computed in your browser and nothing is sent anywhere.