ST.

ANTHONY’S COLLEGE
San Jose, Antique

BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

VALUE ADDED TAX

Nature
1. A business tax, In effect, a sales tax.
2. Indirect tax — burden can be shifted by the seller to the buyer.
3. Imposed:
a. On the gross selling price if sale, barter, or exchange of goods or properties
or
b. On the gross receipts if sale of services, or in the lease or use of properties

in the course of trade or business;

c. On the total value or landed cost, if importation of goods, whether or not in the course of business.

4. How Computed? Tax Credit Method: Output Tax less Input Tax

Summary of Tax Consequences of VAT-Taxable and VAT-Exempt Transactions

Kind of Transaction Tax Consequences

A. VAT-Taxable transactions:
a. Seller is subject to VAT at 12%.
b. Seller is entitled to input tax credit.
1. Sales or leases taxed at 12%
c. Seller pays excess of output tax over input tax to the BIR.
d. Seller can carry-over excess input taxes to succeeding quarter(s).
a. Seller is subject to VAT at 0%.
2. Sales or leases taxed at 0%
b. Seller is entitled to input tax credit.
(zero-rated)
c. Seller can claim refund or tax credit for input taxes.
a. Seller is exempt from VAT.
b. Seller cannot separately bill output tax to his customers.
B. Exempt transactions c. Seller is not entitled to input tax credit.
d. Seller shall be liable to VAT if he issues VAT invoice or receipt, but
without the benefit of input tax credit.

REGISTRATION FOR VAT

Mandatory Registration Optional Registration

1. Gross sales receipts on all lines of non- 1. Any person who is not subject to mandatory registration because
exempt businesses for the past 12 his actual or expected gross sales/receipts from non-exempt
months exceed 3,000,000. businesses for the past 12 months do not exceed P3,000,000.
2. Any VAT-registered person who has other lines of business
which are VAT-exempt. The VAT- exempt business must not be
2. Expected sales/receipts for the next 12
the main line of business.
months from all lines of non-exempt
businesses exceed 3,000,000.
Note: In (1) and (2), the registration shall be irrevocable for the next
3 years.
3. Franchise “grantees of radio and/or TV 3. Franchise grantees of radio and/or TV broadcasting whose
broadcasting whose annual sales for annual sales ≤ P10M.
the last taxable year exceed
P10,000,000. Note: Registration is irrevocable.
Benefit: The customers or clients of the taxpayer will be able to
Benefit: The VAT-registered person is
reduce their VAT payables by using the input tax credits
entitled to input tax credits.
from their purchases from the taxpayer.

Notes:
1. Registration is required for every separate or distinct establishment or place of business where sales
transactions occur except a warehouse without sales transactions.

2. Each VAT-registered person shall be assigned one (1) TIN. The branch shall use the 9-digit TIN of the
head office + a 3-digit branch code.
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BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

3. For these who are not registered, but become liable to VAT:
A non-VAT taxpayer who initially presumed that his gross sales/receipts plus other non-operating income
for the taxable year will not exceed the #3,000,000 VAT threshold but has actually exceeded the same
during the taxable veer, shall immediately update his registration to reflect the change in tax profile from
non- VAT to VAT taxpayer.
He is required to update his registration immediately within the month following the month he exceeded
the VAT threshold. And he shall be liable to VAT prospectively starting on the first day of the month
following the month when the threshold is breached.

4. Annual registration fee: P500 for every separate or distinct place of business where sales transactions
occur.
Cooperatives are exempted from the registration fee.

5. VAT Registration Certificate and Registration Fee Return must be posted in a conspicuous place in the
place of business.

Effect of Failure to Register by Persons Required to Do So

1. Liable to VAT op their sales:
2. No input VAT credits on their purchases.
3. Cannot separately bill out VAT to customer. In other words, the taxpayer cannot shift the VAT burden to
his customers.
4. Fines and sanctions (OPLAN KANDADO; suspension of operations or closure of business ≥ 5 days).

Cancellation of Registration
A VAT-registered person may cancel his VAT-registration if:
1. He makes a written application showing that his gross sales or receipts (excluding exempt sales) in the
next 12 months shall not exceed 3,000,000; or
2. He ceases business;
3. There is a change in ownership in the case of a single proprietorship;
4. Dissolution of the partnership or corporation;
5. Merger or consolidation with respect to the dissolved corporation;
6. Failure to actually start business;
7. Business becomes exempt;
8. A person who voluntarily registers and then applies for cancellation after the lapse of 3 years;
9. A VAT-registered person whose gross sales or receipts for 3 consecutive years did not exceed P3,000,000
beginning January 1, 2018.

Persons Subject to VAT

1. Those engaged in the selling or leasing of goods, properties, or services subject to VAT and registered
regardless of the level of sales;
2. Those engaged in the selling or leasing of goods, properties or services subject to VAT, whose gross sales
or receipts during the year or in any 12-month period >P3,000,000, whether or not registered;
Note: For purposes of the threshold of P3,000,000, husband and wife shall be considered separate
taxpayers.

3. Those who are VAT-registered and who have VAT-exempt businesses which they choose to register
under the VAT-system, regardless of level of sales;
4. Franchise grantees of radio and/or TV broadcasting whose gross annual receipts do not exceed P10
Million, but are registered;
5. Importers of goods, whether or not in the course of trade or business, regardless of the amount of
purchase.
Note: Unless specifically exempted by law, even a non-stock, non-profit organization or government
entity is liable to pay VAT on the sale of goods or services. As long as the entity provides goods or
services for a fee, remuneration or consideration, then such sale is subject to VAT.
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San Jose, Antique

BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

ZERO-RATED TRANSACTIONS
- Does not result in output VAT, but the taxpayer is entitled to input VAT which shall be available either as a
tax credit or as a refund, IF taxpayer is registered.
- IF not registered, the sales of the taxpayer will be considered VAT-exempt sales.

I. Zero-Rated Sales of Goods

a. Export sales of goods

1. Sale of goods to a foreign country and paid for in acceptable foreign currency.
2. Sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident export-
oriented enterprise and paid for in acceptable foreign currency.
3. Sale of raw materials or packaging materials to export-oriented enterprises whose export sales exceed
70% of total annual production.
4. Considered export sales under E.0. No. 226 (the Omnibus Investment Code), and other special laws:
a. Sales to bonded manufacturing warehouses of export-oriented manufacturers.
b. Sales to registered export traders operating bonded trading warehouses supplying raw materials in
the manufacture of export products.
c. Sales to a BOI-registered producer whose products are 100% exported.
5. Sale of goods, supplies. equipment, and fuel to persons engaged in international shipping or
international air transport operations. Provided, that the sale of such goods and fuel shall pertain to
the transport of goods and passengers from a Philippine _port directly to a foreign port or vice-versa
without docking or stopping at any other port in the Philippines.
Note: The transactions under items (2), (3), and (4) above shall be subject to the 12% VAT, and shall
no longer be considered export sales subject to 0% VAT, upon the satisfaction of the following
conditions:
i. The successful establishment and implementation of an enhanced VAT refund system that
grants refunds of creditable input taxes within ninety (90) days from the filing of the VAT
refund application with the Bureau; and
ii. All pending VAT refund claims as of December 31, 2017 shall be fully paid in cash by
December 31, 2019,

b. Effectively zero-rated sales

Local sales by VAT-registered persons to persons or entities deemed tax-exempt (i.e., granted
exemption from indirect taxes) under a special law or international agreement, such as:
1. Enterprises registered with the SBMA, CIDA, PEZA, and other export processing zones.
2. ADB; IRRI.
3. Sales to diplomatic missions and other agencies or instrumentalities granted tax immunities:
4. Regional or area headquarters of (RHQs) of multinational corporations enjoying VAT zero-rating
on its purchases at the of effectivity of the TRAIN; and
5. Other persons/entities who are entitled 0% VAT on purchases.

II. Zero-Rated Sales of Services

The following services performed locally in the Philippines by VAT-registered persons shall be subject to a
0% rate:
1. Processing, manufacturing, or repacking goods for other persons which goods are subsequently
exported, and which are paid for in acceptable foreign currency.
2. Services other than those in (1), rendered to a person engaged in business conducted outside the
Philippines, or to a non-resident person not engaged in business and who is outside the Philippines, and
which are paid for in acceptable foreign currency.
3. Services rendered to persons/entities whose exemption under special international agreements
effectively subjects the supply of such services to a 0% rate.
4. Services rendered to persons engaged in international shipping or international air transport operations,
including leases of property for use thereof: Provided, that the sale of services shall pertain to the
transport of goods and passengers from a Philippine port directly to a foreign port, or vice-versa.
5. Services performed by subcontractors or contractors in processing, converting, or manufacturing goods
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BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

for an enterprise whose export sales exceed 70% of total annual production.
6. Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign
country.
Note: Transport of passengers and cargo by domestic air or sea carriers from a foreign country to the
Philippines is EXEMPT from business taxes including the VAT for lack of jurisdiction.
7. Sale of power or fuel generated through renewable sources of energy such as solar, wind, biomass,
geothermal, and ocean energy.
Note: Zero-rating does not extend to the sale of services related to maintenance or operating of plants
generating said energy.
Note: The transactions under items (1) and (5) above shall be subject to the 12% VAT, and shall no longer
subject to 0% VAT rate, upon the satisfaction of the following conditions:
1. The successful establishment and implementation of an enhanced VAT refund system that grants
refunds of creditable input taxes within ninety (90) days from the filing of the VAT refund
application with the Bureau; and
2. All pending VAT refund claims as of December 31, 2017 shall be fully paid in cash by December
31, 2019.

EXEMPT TRANSACTIONS
- The sale shall not be subject to output VAT, but the seller is not allowed any ITC.
- Seller cannot bill any output VAT to his customers.
- If the seller issues a VAT invoice or receipt without being VAT-registered, he shall be liable to the output
VAT without the benefit of any input VAT credit.

1. Sale or importation of (a) agricultural and marine food products in their original state, (b) livestock or
poultry of a kind generally used as or yielding or producing foods for human consumption; and (c) breeding
stock and genetic materials therefor.
“Original state” - Meat. fruit, fish, vegetables, and other agricultural and marine food 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, including
those using advanced technological means of packaging, such as shrink wrapping in
plastics, vacuum packing, tetra-pack, and other similar packaging methods.
- Polished and/or husked Tice, com grits, raw cane sugar and molasses, ordinary salt,
and copra shall be considered in their original state.

“Livestock or Poultry” - Does not include fighting cocks, racehorses, zoo animals, and other animals
generally considered as pets.
Notes: a. Sale of bagasse is not exempt from VAT.
b. Fresh water is not an agricultural product, but is considered a mineral, The sale thereof is not
exempt from VAT.

2. Sale or importation of (a) fertilizers; (b) seeds, seedlings, and fingerlings: (c) fish, prawn, livestock and
poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of
finished feeds (except specialty feeds for racehorses, fighting cocks, aquarium fish, zoo animals and other
animals generally considered as pets).

3. Importation of personal and household effects belonging to the residents of Philippines returning from
abroad, and non-resident citizens coming to the Philippines: Provided, that such goods are exempt from
Philippine customs duties.

4. Importation of (a) professional instruments and implements: (b) tools of trade, occupation or employment:
(c) wearing apparel; (d) domestic animals: and f) personal household effects (except any vehicle, aircraft,
machinery, and other goods for use in the manufacture and merchandise of any kind in commercial
quantities), belonging to 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 sale, barter, or exchange,
accompanying such persons, or arriving within a reasonable time.
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BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

5. Services subject to percentage tax under Title V of the Tax Code (Secs. 116-127, Tax Code).

6. Services by agricultural contract growers, and milling for others of palay into rice, corn into grits, and sugar
cane into raw sugar.

7. Medical, dental, hospital, and veterinary services except those rendered by professionals.
Note: Lab services are exempt
Sale of drugs and medicines are VATable, generally. Therefore, if the hospital or clinic operates a
drug store, the sale of drugs and medicine shall be subject to VAT. However, the sale of the same to
in-patients are considered part of hospital services and shall therefore be VAT-exempt.

8. Educational services rendered by private educational institutions, duly accredited by the Department of
Education (DepFd), the Commission on Higher Education (CHED), the Technical Education and Skills
Development Authority (TESDA), and those rendered by government educational institutions.

9. Services rendered by individuals pursuant to an employer-employee relationship.

10. Services rendered by regional or area headquarters (“RHQs") established in’ the Philippines by
multinational corporations which act as supervisory, communications, and coordinating centers for their
affiliates, subsidiaries. or branches in the Asia-Pacific Region. and do not earn or derive income from the
Philippines.

11. Transactions which are exempt under international agreements to which the Philippines is a signatory or
under special laws, except those under PD 529.

12. Sales by agricultural cooperatives duly registered with and in good standing with the Cooperative
Development Authority (CDA) to their members as w ell as sale of their produce, whether in its original
state or processed form, to non-members; and 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.

13. Gross receipts from lending activities by credit or multi-purpose cooperatives duly registered with and in
good standing with the Cooperative Development Authority.

14. Sales by non-agricultural, non-electric, and non-credit cooperatives duly registered with and in good
standing with the Cooperative Development Authority: Provided, that the share capital contribution of each
member does not exceed Fifteen Thousand Pesos (P 15,000).
Notes:
a. Importation by non-agricultural, non-electric, and non-credit cooperatives of machineries and
equipment, including spare parts thereof to be used by them are subject to VAT.
b. All electric cooperatives registered with the National Electrification Administration (NEA) shall be
subject to VAT on sales relative to the generation and distribution of electricity as well as their
importation of machineries and equipment, including spare parts. Provided, however, that sale of power
or fuel generated through renewable sources of energy such as, but not limited to biomass, solar, wind,
hydropower, geothermal, ocean energy, and other sources using technologies, such as fuel cells and
hydrogen fuels, shall be subject to 0% VAT.

15. Export sales by persons who are not VAT registered.

16. The following sales of real properties are VAT-exempt:

a. Sale of real properties not primarily held for sale to customer or held for lease in the ordinary course
of trade or business.
b. Sale of real properties utilized for low-cost housing and socialized housing defined by R.A, No, 7279,
and other related laws.
c. Sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000) and below.
d. Sale of house and lot and other residential dwellings valued at Two Million, Five Hundred Thousand
Pesos (P2,500,000) and below.

Note: For purposes of (c) and (d), if two (2) or more adjacent residential lots, house and lots, or other
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San Jose, Antique

BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

residential dwellings are sold or disposed in favor of one buyer from the same seller, for the
purpose of utilizing the same as one residential area, the sales shall be exempt from VAT only if
the aggregate value of the properties do not exceed P1,500,000 for residential lots, and
P2,500,000 for residential house and lots or other residential dwellings.

17. Lease of a residential unit with a monthly rental not exceeding Fifteen Thousand Pesos (P15,000),
regardless of the amount of aggregate rentals received by the lessor during the year.
Note: Lease of residential units with a monthly rental per unit >P15,000, but the annual aggregate of such
rentals does not exceed P3,000,000, shall still be exempt from VAT, but shall be subject to the 3%
percentage tax. If the annual aggregate exceeds 93,000,000, the same shall be subject to VAT.

18. Sale, importation, printing, or publication of books and any newspaper, magazine, review, or bulletin
which appears at regular intervals with fixed prices for subscription and sale, and which is not devoted
principally to the publication of paid advertisements.
Note: Sale of boots, newspapers, magazines, etc., if electronic format are VAT-taxable,

19. Transport of passengers by international carriers.

Note: Transport of cargo by international carriers is also exempt from VAT because they are subject to the
OPT under Section 118 of the Tax Code.

20. Sale, importation, or lease of passenger or cargo vessels and aircraft, including engine, equipment, and
spare parts thereof for domestic or international transport operations.
Provided, the importation or purchase meets the requirements of Maritime Industry Authority (MARINA).

21. Importation of fuel, goods, and supplies by persons engaged in international shipping or air transport
operations.
Provided, that the said fuel, goods, and supplies shall be used exclusively or shall pertain to the transport of
goods and/or passengers from a port in the Philippines directly to a foreign port or vice-versa without
docking or stopping at any other port in the Philippines unless the docking or stopping at any other
Philippine port is for the purpose of unloading passengers and/or cargoes that originated from abroad, or to
load passengers and/or cargoes bound for abroad.

22. Services of banks, non-bank financial intermediaries performing quasi-banking functions, and other
non-bank financial intermediaries, such as money changers and pawnshops subject to percentage tax
under Sections 121 and 122, respectively, of the Tax Code.

23. Sales or lease of goods and services to Senior Citizens and PWDs, as provided under R.A. Nos. 9994
and 10754.

24. Transfer of property pursuant to Section 40(C)(2) of the Tax Code.

25. Association dues membership fees, and other assessments and charges collected by homeowners’
associations and condominium corporations.

26. Sale of gold to the BSP.

27. Sale of drugs and medicines prescribed for diabetes, high cholesterol, and hypertension beginning
January 1, 2019, as determined by the Department of Health.
Note: Only the sale of such drugs is VAT-exempt. Importation of such drugs is VATABLE.

28. Other VAT-exempt sales:

a. Fees, per diems, allowances, and other income received by corporate directors from corporations of
which they are not employees.
b. Sales by PEZA and other ecozone registered enterprises enjoying the preferential tax rate of 5% in
lieu of all taxes.
c. Sales of services by professionals and other suppliers of services hired under a contract for service or job
order with the departments and agencies of the government, its instrumentalities, local government
units, state colleges and universities, including GOCCs and government financial institutions (GFIs)
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BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

shall be exempt from VAT Provided, (1) they derive gross receipts of not more than P250,000 in any
12-month period, (2) such incomes are received from a LONE PAYOR, and (3) such Professionals have
no other source of income.
d. Amounts of money received in trust which do not belong to the recipient, and which do not redound to
the benefit of the recipient are not subject to VAT.
e. Other sales which are VA T-exempt under special laws.

29. 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 Three
Million Pesos (P3,000,000).
For purposes of the threshold of P3,000,000, the husband and wife shall be considered separate taxpayers.

VAT-TAXABLE SALE OF GOODS / PROPERTIES

1. VATatable sales – the sale must be (a) an actual sale (b) in the course of trade or business, of goods or
properties within the commerce of man.

2. Transactions deemed sale – transactions which lack one or both of the elements that makes a sale VATable.
Transactions (a) to (d) below are deemed sales so as to prevent the taxpayer from evading payment of the
output VAT.
Transaction (e), on the other hand, is treated as an actual sale to enable the recipients of the goods or properties
to avail of the input VAT credits on such transactions “deemed sales”.

a. Transfer, use, or consumption not in the course of business of goods or properties originally intended for
sale or for use in the course of business.
Transfer of goods or properties not in the course of business can take place when the VAT-registered
person withdraws goods from his business for his personal use.

b. Distribution or transfer of goods or properties to:

i. Shareholders or investors as property dividends: or
ii. Creditors in payment of debt or obligation.

c. Consignment of goods if actual sale is not made within sixty (60) days following the date such goods
were consigned.
Consigned goods returned by the consignee within the 60-day period are not deemed sold; and

d. Transmission of property to a trustee IF:

i. The property transferred is one for sale, lease, or use in the ordinary course of trade or business, and
ii. The transfer constitutes a completed gift. The transfer is completed gilt if the transferor divests
himself absolutely of control over the property, i.e., an irrevocable transfer of thy corpus and or an
irrevocable designation of the beneficiary.

e. Retirement from or cessation of business with respect to inventories of taxable goods (capital goods,
stock-in-trade, supplies, materials) existing as of such retirement or cessation, whether or not the business
is continued by the new owner.

Examples of transactions deemed sale, and therefore VAT-taxable:

a. “Change of ownership of the business”. There is a change in the ownership of the business when a single
proprietorship incorporates, or the proprietor of a single proprietorship sells his entire business.
b. Dissolution of a partnership, and creation of a new partnership which takes over the business.
c. Liquidating dividends where the assets of the corporation are distributed to the shareholders.

Examples of transactions not subject to VAT:

a. Change in the control of a corporation.
b. Merger or consolidation of corporations.
c. Change in the trade or corporate name.
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San Jose, Antique

BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

OUTPUT VAT
- 12% of the gross selling price (GSP), exclusive or net of VAT, of the goods sold, bartered, exchanged, or
deemed sold in the Philippines, OR

12/112 of the total invoice price (inclusive or gross of VAT).

- For 0-rated sales, the output VAT is 0% of the GSP.

Tax Base: GSP, net of Sales Discounts, Sales Returns, and Allowances

A. GSP = the total amount of money or its equivalent which the purchaser must pay the seller in consideration
of the sale, barter, or exchange. Any excise tax shall form part of the GSP.
When the GSP is unreasonably lower than the actual market value, the CIR shall, by rules and
regulations prescribed by the Secretary of Finance, determine the appropriate tax base. However, when one
of the parties in the government, the output VAT shall be based on the actual selling price.
“Unreasonably lower” = lower by more than 30% of the actual market value.

B. For transactions deemed sale:

1. Tax Base = Market value of the goods at the time of transaction in:
a. Transfer, use, of consumption not in the course of trade or business.
b. Distributions to shareholders or creditors.
c. Consignment sales.
d. Transmission of property to trustee.

2. Tax Base = Lower of acquisition cost or current market price of the goods.
In retirement from or cessation of business.

C. When there is a cessation of status as a VAT-registered person

The output tax on goods or properties originally intended for sale or for use in business, including capital
goods existing at the time of the change in or cessation of status of a taxpayer as a VAT-registered person,
shall be based on the acquisition cost or the current market price of the goods, whichever is lower.

Computation of Input VAT (ITC)

- The same mules above are applied, but to purchases.

VAT on Sale of Real Properties

Sale of real properties (a) held primarily for sale to customers or (b) held for lease in the ordinary course of trade
or business of the seller or (c) used in trade or business, shall be subject to VAT:
1. Regardless of the amount of the gross selling price, if the real property is not residential (i.e., commercial,
industrial, etc.)
2. If real property is residential, it shall be subject to VAT if the GSP exceeds:
a. P1,500,000 for residential lots, or
b. P2,500,000 for residential house and lots or other residential dwellings.

Notes:
A. In the sale, barter, or exchange of real properties subject to VAT.
1. The GSP shall be the highest of:
a. Selling price in the sales document; or
b. Zonal value; or
c. Assessors’ value.
2. If VAT is not billed separately in the sales document, the selling price is deemed inclusive of VAT.
3. If the GSP is based on the zonal or assessor's value, the same is deemed exclusive of VAT.

B. IF Cash sale:
VAT – 12% of highest of (Selling price, zonal value, or assessor's value)
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BUSINES EDUCATION DEPARTMENT

AEC 215 Business Taxation

IF Deferred-payment basis not on the installment plain

VAT – 12% of highest of (Selling price, zonal value, or assessor's value)

IF on Installment plan
1. VAT payments = 12% of installment payments
BUT
2. Where GSP = Zonal or Assessor's value

Actual collection of the consideration Higher of

(exclusive of VAT) Zonal Value
x Tax Base or = Tax Base
Agreed consideration appearing in the Assessor's
contract (exclusive of VAT) Value

Tax Base x 12% = VAT

C. If two (2) or more adjacent residential lots, house and lots, or other residential dwellings are sold or disposed
in favor of one buyer from the same seller, for the purpose of utilizing the same as one residential area, the
sales shall be VAT-taxable if the aggregate value of the properties exceed P1,500,000 for residential lots, and
P2,300,000 for residential house and lots or other residential dwellings.

D. The sale of parking lots is subject to VAT regardless of the amount of the selling price since parking lots are
not residential lots.

E. VAT may likewise be imposed in foreclosure sales. When the mortgagor fails to redeem the real property,
which was an ordinary asset in his hands, the VAT must be paid by the mortgagor on or before the 20th day or
25th day of the month following the month when the right of redemption prescribes.