Sec 109
Sec 109
Sec 109
(A) Sale or importation of agricultural and marine food products in their original state, livestock
and poultry of or king generally used as, or yielding or producing foods for human consumption;
and breeding stock and genetic materials therefor.
Products classified under this paragraph shall be considered in their original state even if they
have undergone the simple processes of preparation or preservation for the market, such as
freezing, drying, salting, broiling, roasting, smoking or stripping. Polished and/or husked rice,
corn grits, raw cane sugar and molasses, ordinary salt and copra shall be considered in their
original state; [94]
(B) Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and
poultry feeds, including ingredients, whether locally produced or imported, used in the
manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium
fish, zoo animals and other animals generally considered as pets);
(C) Importation of personal and household effects belonging to the residents of the Philippines
returning from abroad and nonresident citizens coming to resettle in the Philippines: Provided,
That such goods are exempt from customs duties under the Tariff and Customs Code of the
Philippines;
(F) Services by agricultural contract growers and milling for others of palay into rice, corn into
grits and sugar cane into raw sugar;
(G) Medical, dental, hospital and veterinary services except those rendered by professionals;
(H) Educational services rendered by private educational institutions, duly accredited by the
Department of Education(DepED), the Commission on Higher Education (CHED), the Technical
Education and Skills Development Authority (TESDA) and those rendered by government
educational institutions; [55]
(I) Services rendered by individuals pursuant to an employer-employee relationship;
(K) Transactions which are exempt under international agreements to which the Philippines is a
signatory or under special laws, except those under Presidential Decree No. 529; [55]
(L) Sales by agricultural cooperatives duly registered with the Cooperative Development
Authority to their members as well as sale of their produce, whether in its original state or
processed form, to non-members; their importation of direct farm inputs, machineries and
equipment, including spare parts thereof, to be used directly and exclusively in the production
and/or processing of their produce;
(M) Gross receipts from lending activities by credit or multi-purpose cooperatives duly
registered with the Cooperative Development Authority;
(N) Sales by non-agricultural, non- electric and non-credit cooperatives duly registered with the
Cooperative Development Authority: Provided, That the share capital contribution of each
member does not exceed Fifteen thousand pesos (P15,000) and regardless of the aggregate
capital and net surplus ratably distributed among the members;
(P) Sale of real properties not primarily held for sale to customers or held for lease in the
ordinary course of trade or business or real property utilized for low-cost and socialized housing
as defined by Republic Act No. 7279, otherwise known as the Urban Development and Housing
Act of 1992, and other related laws, residential lot valued at One million pesos (P1,500,000) and
below, house and lot, and other residential dwellings valued at Two million five hundred
thousand pesos (P2,500,000) and below: Provided, That beginning January 1, 2021, the VAT
exemption shall only apply to sale of real properties not primarily held for sale to customers or
held for lease in the ordinary course of trade or business, sale of real property utilized for
socialized housing as defined by Republic Act No. 7279, sale of house and lot, and other
residential dwellings with the selling price of not more than Two million pesos (P2,000,000):
[95]
Provided, further, That 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 Philippine
Statistics Authority (PSA); [98] [99]
(Q) Lease of a residential unit with a monthly rental not exceeding Fifteen thousand pesos
(₱15,000); [100]
(R) Sale, importation, printing or publication of books, and any newspaper, magazine, journal,
review bulletin, or any such educational reading material covered by the UNESCO Agreement
on the Importation of Educational, Scientific and Cultural Materials, including the digital or
electronic format thereof: Provided, That the materials enumerated herein are not devoted
principally to the publication of paid advertisements;
(T) Sale, importation or lease of passenger or cargo vessels and aircraft, including engine,
equipment and spare parts thereof for domestic or international transport operations;
(U) Importation of fuel, goods and supplies by persons engaged in international shipping or air
transport operations: Provided, That the fuel, goods, and supplies shall be used for international
shipping or air transport operations; [95]
(V) Services of bank, non-bank financial intermediaries performing quasi-banking functions, and
other non-bank financial intermediaries;
(W) Sale or lease of goods and services to senior citizens and persons with disability, as provided
under Republic Act Nos. 9994 (Expanded Senior Citizens Act of 2010) and 10754 (An Act
Expanding the Benefits and Privileges of Persons With Disability), respectively; [95]
(X) Transfer of property pursuant to Section 40(C)(2) of the NIRC, as amended; [95]
(Y) Associations dues, membership fees, and other assessments and charges collected by
homeowners’ associations and condominium corporations; [95]
(i) Diabetes, high cholesterol, and hypertension beginning January 1, 2020; and [103]
(ii) Cancer, mental illness, tuberculosis, and kidney diseases beginning January 1, 2021. [104]
Provided, That the DOH shall issue a list of approved drugs and medicines for this purpose
within sixty (60) days from the effectivity of this Act; and [105]
(BB) Sale or importation of the following beginning January 1, 2021 to December 31, 2023: [106]
(i) Capital equipment, its spare parts and raw materials, necessary for the production of personal
protective equipment components such as coveralls, gown, surgical cap, surgical mask, N-95
mask, scrub suits, goggles and face shield, double or surgical gloves, dedicated shoes, and shoe
covers, for COVID-19 prevention; and [106]
(ii) All drugs, vaccines and medical devices specifically prescribed and directly used for the
treatment of COVID-19; and [106]
(iii) Drugs for the treatment of COVID-19 approved by the Food and Drug Administration
(FDA) for use in clinical trials, including raw materials directly necessary for the production of
such drugs: Provided, That the Department of Trade and Industry (DTI) shall certify that such
equipment, spare parts or raw materials for importation are not locally available or insufficient in
quantity, or not in accordance with the quality or specification required: Provided, further, That
for item (ii), within sixty (60) days from the effectivity of this Act, and every three (3) months
thereafter, the Department of Health (DOH) shall issue a list of prescription drugs and medical
devices covered by this provision: Provided, finally, That the exemption claimed under this
subsection shall be subject to post audit by the Bureau of Internal Revenue or the Bureau of
Customs as may be applicable. [106]
(CC) 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 do not exceed the
amount of Three million pesos (P3,000,000.00): [107] Provided, That the amount herein stated
shall be adjusted to its present values using the consumer price index, as published by the
Philippine Statistics Authority (PSA) every three (3) years.
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