VAT inclusive vs VAT exclusive

Convert a price now: open the VAT calculator. Choose "Add 12% VAT to a price" for a VAT-exclusive amount or "Remove VAT from a VAT-inclusive price" for an inclusive one. It shows the base, the VAT and the formula it used.

How to add 12% VAT to a VAT-exclusive price

Multiply the base price by 0.12 to get the VAT, then add it: total = base × 1.12. The rate comes from NIRC Sec. 106(A), which levies "a value-added tax equivalent to twelve percent (12%) of the gross sales" of goods, and Sec. 108(A), which applies the same 12% to services, both as amended by RA 11976 (Ease of Paying Taxes Act).

1. Start with the base price. Example: a ₱25,000 service quote, plus VAT.
2. Multiply by 0.12. ₱25,000 × 0.12 = ₱3,000 VAT.
3. Add the two. ₱25,000 + ₱3,000 = ₱28,000 total. The invoice shows ₱3,000 as the VAT line.

How to extract VAT from a VAT-inclusive price

Divide the inclusive price by 1.12 to get the base, then subtract the base from the price to get the VAT. This equals price × 12/112. Never take 12% of an inclusive price, because the 12% is charged on the base, not on the total.

1. Start with the price paid. Example: ₱50,000 VAT-inclusive.
2. Divide by 1.12. ₱50,000 ÷ 1.12 = ₱44,642.86 base, rounded to the centavo.
3. Subtract. ₱50,000 − ₱44,642.86 = ₱5,357.14 VAT.

The VAT calculator runs both directions and rounds the base to the centavo before subtracting, the same method used in every example on this page.

The same amount quoted both ways

Amount quoted	VAT-exclusive: VAT added	VAT-exclusive: total paid	VAT-inclusive: base	VAT-inclusive: VAT inside
₱112	₱13.44	₱125.44	₱100.00	₱12.00
₱1,000	₱120.00	₱1,120.00	₱892.86	₱107.14
₱5,000	₱600.00	₱5,600.00	₱4,464.29	₱535.71
₱10,000	₱1,200.00	₱11,200.00	₱8,928.57	₱1,071.43
₱50,000	₱6,000.00	₱56,000.00	₱44,642.86	₱5,357.14

Exclusive columns use amount × 0.12. Inclusive columns use amount ÷ 1.12, rounded to the centavo, then amount minus base.

Which rate and threshold apply, and for what period

Rule	Legal basis	Period
12% of gross selling price (goods) and of gross receipts (services)	NIRC Secs. 106(A) and 108(A) as worded by RA 10963 (TRAIN)	From January 1, 2018, TRAIN's effectivity date, until replaced by the RA 11976 wording
12% of gross sales (goods and services)	NIRC Secs. 106(A) and 108(A) as amended by RA 11976	Current. RA 11976 was approved January 5, 2024 and took effect 15 days after publication
Sales up to ₱3,000,000 a year are VAT-exempt	NIRC Sec. 109(BB) as amended by TRAIN	From January 1, 2018 until RA 11976
Sales up to ₱3,000,000 a year are VAT-exempt, with the amount adjusted by the consumer price index every three years	NIRC Sec. 109(CC) as amended by RA 11976	Current

The 12% rate did not change between the two laws. RA 11976 changed the base wording to "gross sales" for both goods and services.

When a seller must charge VAT

Under NIRC Sec. 236(F) as amended by RA 11976, a seller must register for VAT when its gross sales for the past 12 months, other than exempt sales, "have exceeded the threshold as provided in Section 109(CC)", or when there are reasonable grounds to believe the next 12 months will. A seller below ₱3,000,000 that is not VAT-registered charges no VAT and pays 3% percentage tax on gross quarterly sales instead (NIRC Sec. 116), unless an individual elects the 8% income tax option.

What the VAT invoice must show

Whichever way the price was quoted, NIRC Sec. 113(B) as amended by RA 11976 requires the VAT invoice to show:

• a statement that the seller is a VAT-registered person, followed by its TIN;
• the total amount the buyer pays "with the indication that such amount includes the value-added tax";
• the VAT amount "as a separate item";
• the words "VAT-exempt sale" or "zero-rated sale" where they apply, with a breakdown when one invoice mixes taxable, exempt and zero-rated items;
• for sales of ₱1,000 or more to a VAT-registered buyer, the buyer's name, address and TIN.

So a ₱112 shelf price and a "₱100 plus VAT" quote produce the same invoice: total ₱112, VAT ₱12. Sec. 113 sets what the invoice shows. It does not set how a price tag or quotation must be worded. A VAT-registered buyer can credit only "input tax evidenced by a VAT invoice issued in accordance with Section 113" (NIRC Sec. 110(A)).

Who this does not apply to

• Sellers that are not VAT-registered. They cannot add or include VAT. One that issues an invoice showing its TIN followed by the word "VAT" owes the VAT with no input tax credit plus a 50% surcharge (NIRC Sec. 113(D)).
• VAT-exempt sales under NIRC Sec. 109 and zero-rated sales under Sec. 106(A)(2). There is no 12% to add or extract.

Next step for sellers

If you sell, report the output VAT on BIR Form 2550Q within 25 days after each quarter (NIRC Sec. 114(A)). Not VAT-registered yet? Check your sales against the ₱3,000,000 VAT threshold; below it you pay 3% percentage tax instead, which the percentage tax calculator works out.