Worldwide VAT, GST and Sales Tax Guide
C. Who is liable
A taxable person is any individual, trust, estate, partnership, corporation, joint venture, cooperative or association that carries out any of the following activities in the course of a trade or business:
• Sells, barters, exchanges or leases goods or property
• Renders services, including digital services
• Imports goods
In addition, if the importer is exempt from tax, the purchaser, transferee or recipient of imported goods is liable for VAT, regardless of whether such person is a registered taxable person.
Non-established businesses that perform services in the Philippines are deemed to be making sales in the course of a trade or business even if the services are not performed on a regular basis.
The digital service provider, whether resident or nonresident, shall be liable for assessing, collecting and remitting the VAT on digital services consumed in the Philippines. (Section 108-A, RA No. 12023)
In general, a taxable person with gross sales or receipts that have exceeded or that are expected to exceed PHP3 million over a 12-month period must register as a taxable person.
A radio or TV broadcasting franchisee must register if its gross annual receipts from the franchise exceeded PHP10 million in the preceding calendar year.
A professional person is liable for 12% VAT if its gross receipts or fees for the previous 12 months exceed PHP3 million or will exceed this amount in the next 12 months. A professional that is not registered for VAT is liable for the percentage tax at a rate of 3% if its gross receipts for the previous 12 months were equal to or less than this threshold.
Exemption from registration. The VAT law in the Philippines does not contain any provision for exemption from registration.
Voluntary registration and small businesses. It is possible for a taxable person that is otherwise generally not required to register for VAT to become VAT-registered on a voluntary basis.
Any person who elects to register under optional VAT registration shall not be allowed to cancel VAT registration for the next three years.
VAT registration is optional for the following persons:
• A VAT-exempt person with gross sales or receipts that do not exceed PHP3 million.
• A radio or television broadcasting franchisee with gross annual receipts from the franchise that did not exceed PHP10 million in the preceding calendar year.
A taxable person with mixed transactions may opt for VAT to apply to its otherwise VAT-exempt transactions.
The following persons must register as non-VAT persons:
• A VAT-exempt person that is not registered as a taxable person
• An individual engaged in business with gross sales or receipts of PHP3 million or less in a 12-month period
• Nonstock, nonprofit organizations or associations engaged in trade or business with gross sales or receipts of PHP3 million or less in a 12-month period
• Cooperatives, except electric cooperatives
• Radio and television broadcasters with gross annual receipts of PHP10 million or less that do not opt to be registered for VAT
Registration procedures. A new taxable person must file an application for registration as a VATregistered taxable person. Corporations and partnerships must file BIR Form No. 1903 (Application for Registration) or BIR Form No. 1905 (Application for Registration Information Update) and physically file it with the Revenue District Office (RDO) having jurisdiction at the place where the head office and branch is located together with the required attachments on or before the first sale transaction. New taxable persons are required to pay an annual registration fee of PHP500 at the Authorized Agent Banks (AABs) of the concerned RDO and submit the requirements for the authority to print (ATP) principal and supplementary receipts/invoices and registration of books of accounts. As soon as all the requirements are submitted, the RDO will issue the Certificate of Registration (Form 2303).
Registration of a business, the issuance of an electronic certificate of registration (COR), ATP, application for an ATP or use of BIR-printed receipts/invoices (BPR/BPI)/employer account enrollment to facilitate the TIN issuance of employees/registration of book of accounts are now required to be done under the online registration and update system (ORUS).
ORUS has also the following new features: online payment of annual registration fee for new business registrants/online verification of taxpayer identification number (TIN)/BIR-registered business search facility and online inquiry of registration fee payment for BIR internal users and business registration such as registration of a new branch/facility and also updating of registered information.
Deregistration. A taxable person may cancel its registration for VAT in any of the following circumstances:
• The taxable person’s written application to the Commissioner of Internal Revenue (CIR) satisfactorily shows that its gross sales or receipts for the following 12 months (other than those that are exempt) will not exceed PHP3 million.
• The person has ceased to carry on its trade or business and does not expect to recommence any trade or business in the next 12 months.
• A change of ownership in a single proprietorship occurs.
• A partnership or corporation is dissolved.
• A merger or consolidation of a dissolved corporation occurs.
• The person registers before a planned business commencement but fails to start its business.
Changes to VAT registration details. If there has been a change in the taxable person’s VAT registration details, it is their obligation to update their records with the BIR District Office where their business is registered by filing a duly accomplished BIR Form No. 1905, specifying therein any change in tax type and other taxable persons’ details. No specific time limit applies for such notification. Once fully implemented, updates to a taxable person’s VAT registration details may be done online through the BIR ORUS.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 12%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the zero rate or an exemption.
A taxable person that makes zero-rated transactions may use the input tax as credit against VAT liability, or it may file a claim for a refund or apply for a tax credit certificate (TCC).
• Local sales of goods, properties and services by a taxable person to a person or entity that was granted indirect tax exemption under special laws or international agreements. The term “exempt” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• The sale or import of the following items:
– Agricultural or marine food products in their original state
– Livestock or poultry used as, or for producing, foods for human consumption
– Breeding stock and related genetic materials
– Fertilizers, seeds, fingerlings, fish, prawn, livestock or poultry feeds and ingredients used for manufacturing finished feeds that are unfit for human consumption or ingredients that cannot be used for the production of products for human consumption as certified by the Food and Drug Administration (except specialty feeds for racehorses, fighting cocks, zoo animals or pets)
– Drugs and medicines prescribed for diabetes, high cholesterol and hypertension
– Drugs and medicines for cancer, mental illness, tuberculosis and kidney diseases
• Import of the following items:
– Personal or household effects of residents returning from abroad or nonresident citizens coming to resettle in the Philippines if the items qualify for exemption from customs duties
– Professional instruments and implements, tools of trade, occupation or employment, wearing apparel, domestic animals and personal and household effects belonging to persons coming to live in the Philippines or Filipinos or their families and descendants who are now residents or citizens of other countries (such parties hereinafter referred to as overseas Filipinos) in quantities and of the class suitable to the profession, rank or position of the persons importing said items, for their own use and not for barter or sale, accompanying such persons, or arriving within a reasonable time; the Bureau of Customs (BOC) upon production of satisfactory evidence that such persons are actually coming to settle in the Philippines and that the goods are brought from their former place of abode, exempt such goods from payment of duties and taxes; vehicles, vessels, aircrafts, machineries and other similar goods for use in manufacture, shall not fall within this classification and shall therefore be subject to duties, taxes and other charges
– Goods by an export-oriented enterprise whose export sales are at least 70% of the total annual production of the preceding taxable year; provided that such goods are directly attributable to the export activity of the export-oriented enterprise [Section 109 (dd) of the Tax Code, as amended by Section 8 of CREATE MORE Act]
– Fuel, goods and supplies by persons engaged in international shipping or air transport operations [Section 109 (u) of the Tax Code, as amended by Section 8 of CREATE MORE Act]
• Services rendered by agricultural contract growers and milling for others of palay (unhusked rice) into rice, corn into grits and sugar cane into raw sugar
• Services subject to percentage taxes
• Domestic common carriers by land (which must be a holder of a valid and current Certificate of Public Convenience to be considered as such) for passenger transport (subject to percentage tax under Section 117 of the Tax Code)
• Garage keepers (subject to percentage tax under Section 117 of the Tax Code)
• Sales of gold to the Philippines Central Bank (Bangko Sentral ng Pilipinas or BSP)
• Radio or television broadcast franchisees with annual gross receipts of PHP10 million or less (subject to percentage tax under Section 119 of the Tax Code)
• Gas and water utilities’ franchisees (subject to percentage tax under Section 119 of the Tax Code)
• Persons, companies and corporations (not cooperatives or associations) engaged in providing life insurance in the Philippines (subject to percentage tax under Section 123 of the Tax Code)
from output tax, which is the VAT charged on the sale or lease of taxable goods or properties or services. If at the end of the tax quarter, a taxable person’s output tax exceeds input tax, the person must pay the excess. If input tax exceeds output tax, the excess is carried over to the next quarter or quarters.
There is no set time limit for a taxable person to reclaim input tax in the Philippines. This means that effectively the input tax (i.e., VAT credit) may be carried forward until its complete recovery.
If the input tax inclusive of input tax carried over from the previous quarter exceeds the output tax, the input tax inclusive of input tax carried over from the previous quarter that may be credited in every quarter shall not exceed 70% of the output tax. The excess input tax shall be carried over to the succeeding quarter or quarters.
Input tax related to certain transactions may be creditable against output tax if the tax paid is evidenced by a VAT sale or service invoice issued by a taxable person. The following table lists such transactions.
• Goods purchased or imported for any of the following purposes:
– Sale of the goods themselves
– Conversion into a finished product for sale or goods intended to form part of a finished product for sale, including packaging materials
– Use of supplies in the course of business
– Use of raw materials in a supply of services
– Use in trade or business for which deduction for depreciation or amortization is allowed
• The purchase of real property on which VAT has been paid.
• The purchase of services on which VAT has been paid.
• Transactions deemed to be sales.
• Transitional input tax of 2% of value of beginning inventory or of the actual VAT paid, whichever is higher.
• Presumptive input tax of 4% of the gross value of purchases of primary agricultural products used in the production of sardines, mackerel, milk, refined sugar, cooking oil and packed noodle-based instant meals.
• Transitional input tax credits allowed under the law and regulations.
For purposes of the above table, transitional input tax is a form of input tax allowed on transition from non-VAT-registered status to VAT-registered status. It may be credited against output tax when the VAT registration takes effect. Presumptive input tax is a form of fixed input tax allowed to persons or firms engaged in the processing of sardines, mackerel and milk; and in manufacturing refined sugar, cooking oil and packed noodle-based instant meals. In general, it may be credited against output tax on the consummation of purchases of primary agricultural products (used as inputs to production).
Nonresident DSPs are not allowed to claim creditable input tax. (Section 110, RA No. 12023)
Input tax paid on local purchases attributable to VAT-exempt sales shall be deductible from the gross income of the taxpayer. (Section 34 of the Tax Code, as amended by Section 4 of CREATE MORE Act)
Nondeductible input tax. Input tax may not be recovered on the purchase or importation of goods and services that are not used for business purposes.
Examples of items for which input tax is nondeductible
• Purchases of a non-VAT-registered taxable person from a VAT-registered taxable person that are not related to a taxable business use.
• A denied input tax refund claim that does not meet the requirements or elements described above.
Examples of items for which input tax is deductible (if related to a taxable business use)
• Purchases of a non-VAT-registered taxable person from a VAT-registered taxable person.
• A denied input tax refund claim may be claimed as a deduction from gross income if the loss is actually sustained by the taxable person; sustained during the taxable year; not compensated by insurance or other forms of indemnity; incurred in the taxable person’s trade, profession or business; and evidenced by a closed and completed transaction. In the Philippines, when a claim for input tax is denied by the tax authorities, there may be a basis to treat this as a deductible loss instead, as long as the conditions described above are met. Otherwise, the denied input tax (or loss) may be considered nondeductible.
Partial exemption. Input tax that is directly attributed to transactions subject to VAT may be recognized for tax credit. However, input tax that is directly attributable to taxable sales of goods and services to the government is not available for credit against output tax related to supplies made to nongovernment entities.
Input tax that is not directly attributable to either taxable or exempt transactions must be prorated monthly between taxable and exempt transactions. Input tax credit is permitted only for the portion of input tax that relates to transactions subject to VAT.
Approval from the tax authorities is not required to use the partial exemption standard method in the Philippines. Special methods are not allowed in the Philippines.
A taxable person making supplies of goods, property and services that are zero-rated (or effectively zero-rated) may apply for a tax credit certificate (TCC) or a refund of input tax attributable to these sales (except for the portion of the excess input tax that has already been applied against output tax). The default claim shall be a cash refund unless the claimant applies for the issuance of a TCC.
Under Section 112 (A) of the Tax Code, as amended, the request may be made within two years after the close of the tax quarter in which the sales are made.
The CIR must grant the TCC or refund within 90 days after the date of submission of all documents required with respect to the claim. Should the CIR find that the grant of refund is not proper, he must state in writing the legal and factual basis for the denial. Failure on the part of any official, agent or employee of the BIR to act on the application within the 90-day period shall be punishable.
Capital goods. A taxable person’s purchases or imports of capital or depreciable goods may be claimed as credit against output tax, in accordance with the rules described below. Amortization of input tax on purchased and imported capital goods is no longer allowed.
If the aggregate acquisition cost exceeds PHP1 million in a calendar month, regardless of the unit cost of the capital goods, and if the capital goods have an estimated useful life of five years or more, a claim for input tax credit begins in the month in which the capital goods are acquired and is spread evenly over 60 months. The credit is spread evenly over the actual number of months of the useful life of the asset if its estimated useful life is less than five years.
If the aggregate acquisition cost does not exceed PHP1 million in a calendar month, the total input tax is allowable as a credit against output tax in the month of acquisition.
Refunds. Any input tax attributable to zero-rated sales by a taxable person may at its option be refunded or applied for a TCC.
The administrative claim for VAT refund or TCC must be filed within two years from the close of the taxable quarter when the zero-rated sales and/or effectively zero-rated sales were made.
The application for VAT refund must be accompanied by complete supporting documents as specifically enumerated in existing revenue regulations. The application will be denied if the taxable person fails to submit the complete supporting documents.
The CIR has 90 days from the submission of the complete supporting documents within which to decide whether or not to grant the claim. If the claim is not acted upon by the CIR within the 90 days, such inaction shall be deemed a denial of the claim.
In the case of a denial, the taxable person should file a judicial claim with the Court of Tax Appeals (CTA) (i) within 30 days from receipt of the CIR’s decision denying the claim (whether in full or in part) within the 90-day period, or (ii) from the expiration of the 90-day period if the CIR does not act within the 90-day period. The taxable person is required to observe the 90-day plus 30-day rule before lodging a petition for review with the CTA.
In addition to the above, on 6 December 2024, the President of the Philippines signed into law Republic Act (RA) No. 12079, an act creating a VAT refund mechanism on locally purchased goods for nonresident tourists, provided that the following requisites are present:
1. The goods are purchased in person by the tourist in duly accredited stores.
2. Such goods are taken out of the Philippines by the tourist within 60 days from the date of purchase.
3. The value of the goods purchased per transaction is equivalent to at least PHP3 million.
The implementing rules and regulations on this VAT refund mechanism shall be issued within 90 calendar days from the effectivity of RA No. 12079.
Pre-registration costs. Input tax incurred on pre-registration costs in Philippines is not recoverable.
Bad debts. Output tax accounted for on supplies that do not get paid by the recipient (i.e., bad debts) cannot be recovered in the Philippines.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in the Philippines.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses that are not registered for VAT in the Philippines is not recoverable.
H. Invoicing
VAT invoices. A taxable person must issue a VAT sales invoice for every sale, barter or exchange of goods or property or a VAT service invoice for every lease of goods or property and for every sale, barter or exchange of services. ATP receipts and/or sales invoices must be secured from the tax authorities.
Credit notes. A VAT credit note may be used to reduce the VAT charged on supply of goods or services. Tax credit and debit notes must show the same information as a VAT invoice or receipt.
Electronic invoicing. Electronic invoicing is mandatory in the Philippines for certain taxable persons.
Scope of electronic invoicing. For business-to-business (B2B), business-to-consumer (B2C), and business-to-government (B2G) supplies, electronic invoicing is mandatory for certain taxable persons in the Philippines.
The following taxable persons are mandated to issue electronic receipts or electronic sales/commercial invoices in lieu of manual receipts/invoices:
• Taxable persons engaged in the export of goods and services.
• Taxable persons engaged in e-commerce.
• Taxable persons under the jurisdiction of the large taxpayers service (LTS) (in Section 237-A of the Tax Code).
At the time of preparing this chapter, there are plans to expand the coverage of electronic invoicing in the future, but no definite timeline has been announced by the BIR as to its implementation.
Electronic invoicing is optional for other taxable persons.
The BIR established an Electronic Invoicing/Receipting System (EIS) capable of storing and processing the data required to be transmitted by these covered taxable persons using their Sales Data Transmission System. These covered taxable persons are directed to register their Computerized Accounting System (CAS) generating e-receipts/e-invoices and/or Cash Register Machine (CRM)/Point-of-Sales Systems and to have their Sales Data Transmission System be certified. They are also mandated to develop a Sales Data Transmission based on the Standard Application Programming Interface (API) Guidelines. Prior to the actual transmission of sales data to the EIS, enrollment of taxable persons shall be necessary for security purposes. They are also required to transmit their sales data covered by the e-receipts/e-invoices using their Sales Data Transmission System into the EIS of the BIR.
Simplified VAT invoices. Simplified VAT invoicing is not allowed in the Philippines. As such, full VAT invoices are required.
Self-billing. Self-billing is not allowed in the Philippines.
Proof of exports. Export sales are subject to the zero rate of VAT if the goods are shipped from the Philippines to a foreign country. The goods must be paid for in acceptable foreign currency (or its equivalent in goods or services), and it must be accounted for in accordance with the rules of the BSP. The sale and shipment of goods must be proven by the following documents:
• VAT invoices that contain the term “zero-rated sale” written or printed on the invoice
• Bills of lading
• Inward letters of credit
• Landing certificates
• Other relevant commercial documents
Foreign currency invoices. If a VAT sales/service invoice is issued in a foreign currency, all values that are required to be paid must be converted into the domestic currency, which is the Philippine peso (PHP), using an acceptable exchange rate.
Supplies to nontaxable person. There are no special invoicing rules for supplies to private consumers. As such, the general invoicing requirements described above apply, and full VAT invoices must be issued for all supplies.
Records. In the Philippines, examples of what records must be held for VAT purposes include all books, registers, records, vouchers and other supporting papers and documents prescribed by the BIR.
In the Philippines, VAT books and records can be held outside of the country. However, where records are held outside of the Philippines, they should be readily available to the BIR upon request.
Record retention period. All taxable persons are required to preserve their books of accounts, including subsidiary books and other accounting records, for a period of 10 years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of filing the return, for the taxable year when the last entry was made in the books of accounts. This is provided that within the first five years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year
when the last entry was made in the books of accounts, the taxable person shall retain hard copies of the books of accounts, including subsidiary books and other accounting records. Thereafter, the taxable person may retain only an electronic copy of the hard copy (i.e., paper) of the books of accounts, subsidiary books and other accounting records in an electronic storage system that complies with the requirements set forth under Section 2-A hereof.
Electronic archiving. Electronic archiving is allowed in the Philippines. Electronic records used to establish tax compliance should contain sufficient transaction-level detail information so that the details underlying the electronic records can be identified and made available to the BIR upon request.
Furthermore, an electronic storage system may be used by the taxable person in preserving books of accounts and other accounting records such as invoices. Such electronic storage system must ensure an accurate and complete transfer of the images of the hardcopy of the books of accounts, including subsidiary books and other accounting records to an electronic storage media and index, store, preserve, retrieve and reproduce the electronically stored images of the hardcopy of the books of accounts, subsidiary books and other accounting records.
Under the TRAIN, within five years from the effectivity of the TRAIN (from 1 January 2018) and upon the establishment of a system capable of storing and processing the required data. The BIR shall require taxable persons engaged in the export of goods and services, taxable persons engaged in e-commerce and taxable persons under the jurisdiction of the LTS to issue electronic receipts or sales or commercial invoices in lieu of manual receipts or sales or commercial invoices subject to rules and regulations to be issued by the Secretary of Finance upon recommendation of the CIR and after a public hearing shall have been held for this purpose. This is provided that taxable persons not covered by the mandate of this provision may issue electronic receipts or, sales or commercial invoices, in lieu of manual receipts, and sales and commercial invoices. In addition, the machines, fiscal devices and fiscal memory devices shall be the expense of the taxable persons.
I. Returns and payment
Periodic returns. Taxable persons that use a manual filing system must file monthly VAT declarations, no later than the 20th day after the end of each month. Taxable persons must also file quarterly VAT returns showing their quarterly gross sales or receipts within 25 days after the close of the tax quarter.
Taxable persons that use the electronic filing are classified according to their business industry and they are given deadlines based on their classification. The due dates for filing range from 21 days to 25 days after the end of the month for each monthly VAT declaration. The return for reporting VAT withholding must be filed on or before the 10th day of the month following the transaction.
From 1 January 2023, the filing and payment of VAT must be done within 25 days following the close of each taxable quarter). Monthly filing and payment of VAT returns (BIR Form No. 2550m) is now available as an option for VAT-registered persons.
Periodic payments. Taxable persons that use a manual filing system must pay the VAT to an authorized agent bank, not later than the 20th day after the end of each month or with the Revenue Collection Officer (RCO) in cases where there are no authorized agent bank present in the locality where the taxable person is registered.
Taxable persons that use the Electronic Filing and Payment System (eFPS) are classified according to their business industry and they are given deadlines based on their classification. The due dates for payment range from 21 days to 25 days after the end of the month for each monthly VAT declaration.
EFPS, as mentioned above, is a system developed by the BIR for electronic filing of tax returns, including attachments, if any, and paying taxes due thereon, specifically through the internet. This system is available to all taxable persons with an email account and internet access who are registered in the BIR Integrated Tax System (ITS).
Advance payment of VAT is required for the sale of refined sugar and flour. The advance VAT must be paid by the owner or seller to the BIR through an authorized agent bank or revenue collection officer before any refined sugar or flour can be withdrawn from any refinery or mill. In addition, the VAT on imported goods must be paid before the release of the goods from the BOC’s custody.
Electronic filing. Electronic filing is mandatory in Philippines for certain taxable persons. The taxable persons for which electronic filing is mandatory are as follows:
• Taxable person account management program
• Accredited importer and prospective importer
• National government agencies
• Licensed local contractors
• Enterprises enjoying fiscal incentives
• Top 5,000 individual taxable persons
• Corporations with paid-up capital stock of PHP10 million and above
• Corporations with complete computerized accounting systems
• Government bidders
• Insurance companies and stockbrokers
• Large taxable persons
• Top 20,000 private corporations
For those taxable persons for which electronic filing is not mandatory, they may either use manual filing or voluntarily use either the eFPS or the Electronic Bureau of Internal Revenue Forms (eBIR Forms).
Payments on account. Payments on account are not required in the Philippines.
Special schemes. No special schemes are available in the Philippines.
Annual returns. Annual returns are not required in Philippines.
Supplementary filings. Summary List of Sales (SLS). The Reconciliation of Listing for Enforcement (RELIEF) system, requires taxable persons with quarterly total sales/receipts (net of VAT), exceeding P2,500,000 to submit an SLS. The RELIEF supports the third-party information program of the Bureau through the cross referencing of third-party information from the taxable persons’ Summary List of Sales and Purchases (SLSP) prescribed to be submitted on a quarterly basis.
Summary List of Sales and Purchases (SLSP). Taxable persons are also required to submit a quarterly SLSP on disc, specifically the compact disc recordable (CDR) medium. Taxable persons that use a manual filing system must file the quarterly SLSP within 25 days after the close of the tax quarter. Taxable persons that use the electronic filing and payment system must submit the quarterly SLSP within 30 days after the close of the quarter.
Correcting errors in previous returns. The taxable person may file an amended VAT return specifying the items corrected or changed, provided that the taxable person has not been issued with a Letter of Authority for tax audit. However, this may be subject to penalties, such as but not limited to fines. This also extends the three-year prescriptive period for the BIR to conduct an audit.
Digital tax administration. There are no transactional reporting requirements in the Philippines. However, under the TRAIN, within five years from the effectivity of the TRAIN (from 1 January
(c) Understatement of taxable sales or receipts by 30% or more of its correct taxable sales or receipts for the taxable quarter
(2) Failure to any person to register as required under Section 236:
(a) The temporary closure of the establishment shall be for the duration of not less than five days and shall be lifted only upon compliance with whatever requirements prescribed by the CIR in the closure order.
Personal liability for company officers. The company’s authorized representatives, such as but not limited to company directors, may be held personally liable for the errors and omissions made, such as deliberate failure to pay tax, file returns, keep records or supply correct and accurate information in the VAT returns submitted to the BIR. Upon conviction, they can be punished by a fine of not less than PHP10,000 and suffer imprisonment of not less than one year as provided by the Tax Code.
Statute of limitations. The statute of limitations in the Philippines is three years. Internal revenue taxes shall be assessed within three years after the last day prescribed by law for the filing of the return. In the case where a return is filed beyond the period prescribed by law, the three-year period shall be counted from the day the return was filed. A return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day.
In the case of a false or fraudulent return with intent to evade tax or of failure to file a return, tax may be assessed at any time within 10 years from discovery of the falsity, fraud or omission.
Further, taxable persons are allowed to modify, change or amend the return within three years from the date of filing, provided that the taxable person has not received any notice for audit or investigation of such return from the tax authorities.