Course 8710 lessons

VAT basics for consumers and businesses

A guide to how value-added tax actually works in everyday life and business, covering the 12% mechanics, VAT-inclusive versus exclusive pricing, and the registration threshold for small businesses.

What VAT actually is: the 12% mechanics

Value-added tax, or VAT, is a tax on spending rather than on earning. In the Philippines, the standard rate is 12%, and it's layered into the price of most goods and services sold in the ordinary course of business, from a bag of rice at the grocery to a haircut at a salon to a laptop bought online.