VAT and percentage tax on rent calculator
Rent in the Philippines bears one of three things: nothing, a 3% percentage tax, or 12% VAT. A residential unit leased at ₱15,000 a month or less bears neither tax NIRC Sec. 109(1)(Q). Other rent bears 3% percentage tax while it totals ₱3,000,000 or less a year and you are not VAT-registered NIRC Sec. 116, and 12% VAT above that NIRC Sec. 108(A). List your leases below to see which applies and how much.
What these taxes are
Both are national business taxes on gross receipts, collected by the Bureau of Internal Revenue every quarter, on top of the income tax. They are taxes on the rent, not on the property: the amilyar on the building is separate.
VAT is 12% of the rent, excluding the VAT itself, for the lease of property NIRC Sec. 108(A). A VAT-registered landlord adds it to the rent, issues VAT invoices, and deducts the VAT paid on purchases for the business (input VAT) before paying the rest. Since the Ease of Paying Taxes Act the base is called gross sales rather than gross receipts EOPT Act Sec. 22; for a monthly lease it is the rent for the period.
Percentage tax is the tax a business pays instead of VAT when it is below the threshold and not VAT-registered: 3% of gross quarterly sales NIRC Sec. 116. It cannot be passed on as VAT, and there is no input credit.
Who pays
The landlord, whether an individual or a corporation. The lease may say the tenant bears VAT on top of the rent, which is common for commercial space, but the duty to file and pay is the landlord’s.
The threshold is per landlord, not per property. Three shops each renting for ₱1,000,000 a year add up to ₱3,000,000; a fourth puts all of them under VAT. The multi-property planner adds them for you.
How it is decided and calculated
| Your rent | Tax | Law |
|---|---|---|
| A residential unit at ₱15,000 a month or less | None | NIRC Sec. 109(1)(Q) |
| Everything else, totalling ₱3,000,000 or less a year, and you are not VAT-registered | 3% percentage tax (1% from 1 July 2020 to 30 June 2023) | NIRC Secs. 109(CC), 116 |
| Everything else, over ₱3,000,000 a year, or you are VAT-registered | 12% VAT, less input VAT | NIRC Sec. 108(A) |
| You chose the 8% income tax option | No percentage tax: the 8% replaces it | NIRC Sec. 24(A)(2)(b) |
The ₱15,000 test is per unit and per month TRAIN Law Sec. 34. A unit at ₱15,000 is exempt; a unit at ₱15,001 is not. A commercial unit is never under this exemption, whatever its rent.
The ₱3,000,000 test counts only the rent not already exempt. Sec. 109(CC) covers transactions “other than the transactions mentioned in the preceding paragraphs”, and the small residential lease is one of those paragraphs NIRC Sec. 109(CC). So ₱144,000 a year from a ₱12,000 apartment does not bring you nearer to VAT.
Percentage tax reaches only receipts exempt under Sec. 109(CC) NIRC Sec. 116. That is why the small residential rent bears no percentage tax either: it is exempt under a different paragraph.
For percentage tax, the rate depends on when the rent was received. The CREATE Act cut it to 1% from 1 July 2020 to 30 June 2023 CREATE Act Sec. 13, and the Ease of Paying Taxes Act restated the 3% with that window EOPT Act Sec. 24. For 2020 and 2023 the calculator asks how much of the rent came in January to June.
The threshold has been ₱3,000,000 since the TRAIN Law TRAIN Law Sec. 34. The Ease of Paying Taxes Act lets it be adjusted for inflation every three years EOPT Act Sec. 18; no adjustment had been issued when these rules were last checked.
Worked examples
Each example below is run through the same calculator at the top of this page. The figures are its output, not typed in by hand.
Three small apartments
A landlord rents out three apartments at ₱12,000, ₱14,000 and ₱18,000 a month, all year, in 2026.
| Step | Working | Amount |
|---|---|---|
| Lease 1: residential, ₱15,000 a month or less: VAT-exempt | ₱12,000.00 × 12 months | ₱144,000.00 |
| Lease 2: residential, ₱15,000 a month or less: VAT-exempt | ₱14,000.00 × 12 months | ₱168,000.00 |
| Lease 3: residential | ₱18,000.00 × 12 months | ₱216,000.00 |
| Rent from residential units at ₱15,000 a month or less | No VAT, no percentage tax | ₱312,000.00 |
| Rent counted toward the ₱3,000,000 threshold | ₱528,000.00 − ₱312,000.00 | ₱216,000.00 |
| Percentage tax | ₱216,000.00 × 3% | ₱6,480.00 |
| Each quarter, if the rent is the same every month | ₱1,620.00 |
Percentage tax on your rent for 2026: ₱6,480.00. This is an illustration. It leaves out any special levy, exemption or adjustment not described in the example.
A commercial building over the threshold
A landlord leases a whole commercial building for ₱300,000 a month in 2026, and paid ₱32,000 of VAT on repairs.
| Step | Working | Amount |
|---|---|---|
| Lease 1: commercial | ₱300,000.00 × 12 months | ₱3,600,000.00 |
| Rent counted toward the ₱3,000,000 threshold | ₱3,600,000.00 | ₱3,600,000.00 |
| Output VAT at 12% | ₱3,600,000.00 × 12% | ₱432,000.00 |
| Less input VAT on your purchases | ₱432,000.00 − ₱32,000.00 | ₱400,000.00 |
| Each quarter, if the rent is the same every month | ₱100,000.00 |
VAT on your rent for 2026: ₱400,000.00. This is an illustration. It leaves out any special levy, exemption or adjustment not described in the example.
A shop in 2023, when the rate changed
A stall leased at ₱50,000 a month for all of 2023: ₱300,000 received from January to June, ₱300,000 from July to December.
| Step | Working | Amount |
|---|---|---|
| Lease 1: commercial | ₱50,000.00 × 12 months | ₱600,000.00 |
| Rent counted toward the ₱3,000,000 threshold | ₱600,000.00 | ₱600,000.00 |
| Percentage tax | ₱300,000.00 × 1% (Jan–Jun) + ₱300,000.00 × 3% (Jul–Dec) | ₱12,000.00 |
| Each quarter, if the rent is the same every month | ₱3,000.00 |
Percentage tax on your rent for 2023: ₱12,000.00. This is an illustration. It leaves out any special levy, exemption or adjustment not described in the example.
Crossing the threshold
Once your rent other than small residential units goes over ₱3,000,000 in a year, you must register for VAT EOPT Act Sec. 34. The BIR’s regulations charge percentage tax up to the point you become liable to VAT and VAT from then on. The calculator, working a whole year at once, charges VAT on the whole year’s rent and says so; your actual bill may be lower if you crossed late in the year.
You can also register for VAT voluntarily below the threshold. Then VAT applies to all your taxable rent and the 8% income tax option is closed to you. Ask your Revenue District Office how long the registration must stay before it can be cancelled.
Filing and paying
| Tax | Return | Due | Law |
|---|---|---|---|
| Percentage tax | BIR Form 2551Q | 25 days after the end of each quarter | NIRC Sec. 128, as amended by EOPT |
| VAT | BIR Form 2550Q | 25 days after the end of each quarter (from 2023) | NIRC Sec. 114(A), as amended by TRAIN and EOPT |
For a calendar year that means 25 April, 25 July, 25 October and 25 January EOPT Act Sec. 29. Before 2023, VAT-registered persons also paid VAT monthly TRAIN Law Sec. 37. Returns are filed and paid with an authorized agent bank, the Revenue District Office, or an authorized tax software provider EOPT Act Sec. 22.
Common mistakes
- Counting small residential rent toward the ₱3,000,000. It does not count.
- Testing the ₱3,000,000 per property instead of adding up all your properties.
- Paying percentage tax while on the 8% income tax option.
- Applying the ₱15,000 exemption to a commercial unit, or to the total of several units under one lease rather than each unit.
- Using 3% for 2021 and 2022, when it was 1%.
- Relying on a ₱500,000 percentage tax exemption: it was vetoed and is not law.
- Forgetting input VAT once registered: VAT on repairs and supplies for the rentals reduces what you pay.
Frequently asked questions
Is rent subject to VAT in the Philippines?
Only above the threshold or if you are VAT-registered. Rent other than small residential units over ₱3,000,000 a year bears 12% VAT. Below it, you pay 3% percentage tax instead.
Is a ₱15,000-a-month apartment VAT-exempt?
Yes. A residential unit leased at ₱15,000 a month or less is exempt from VAT, and it bears no percentage tax either. The rent is still income for income tax.
Does the ₱15,000 limit apply per unit or per lease?
Per unit, per month. A lease of three units at ₱12,000 each is three exempt units, not one ₱36,000 lease.
How much is percentage tax on rent?
3% of gross rent each quarter. ₱50,000 a month of commercial rent is ₱150,000 a quarter, so ₱4,500 a quarter. It was 1% from 1 July 2020 to 30 June 2023.
Do I pay percentage tax if I chose the 8% income tax?
No. The 8% is in place of both the graduated income tax and the percentage tax.
Do I count all my properties toward the ₱3,000,000?
Yes, all the rent you receive, except from residential units at ₱15,000 a month or less. The threshold is per landlord.
What happens when my rent goes over ₱3,000,000?
You must register for VAT. VAT applies from then on, the 8% income tax option closes, and percentage tax applies to the period before.
Is there a ₱500,000 exemption from percentage tax?
No. TRAIN’s text had one, but it was vetoed, and the current law exempts only cooperatives.
Can I pass the VAT on to my tenant?
A VAT-registered landlord charges 12% on top of the rent and shows it on the VAT invoice. A landlord who is not VAT-registered does not charge VAT.
When are the returns due?
25 days after each quarter: 25 April, 25 July, 25 October and 25 January, for both percentage tax and VAT.
Official government sources and legal references
Every rate, ceiling and deadline on this page comes from these laws. The links open the full text as transcribed by the Lawphil Project; the Official Gazette is the record copy.
Republic Act No. 8424, the National Internal Revenue Code of 1997
- Sec. 6(E): Until RA 12001: tax base is the higher of the BIR zonal value and the assessor’s schedule
- Sec. 24(D): 6% final capital gains tax on individuals’ sales of real property held as capital assets; principal-residence exemption
- Sec. 27(D)(5): 6% final tax on domestic corporations’ sales of land or buildings held as capital assets
- Sec. 51(C)(2)(b): Capital gains return due within 30 days after each sale
- Sec. 56(A)(3): Capital gains tax is paid when the return is filed
- Sec. 58(E): No transfer is registered until the BIR certifies the tax was paid
- Sec. 24(A): Income tax on individuals: the graduated table, the 8% option, and the rules for mixed income (as amended by TRAIN)
- Sec. 34(A): Itemized deductions: the ordinary and necessary expenses of the trade or business, paid or incurred in the year
- Sec. 34(L): Optional standard deduction of up to 40% of gross sales or receipts for an individual (as amended by TRAIN; now Sec. 34(K))
- Sec. 51(C)(1): An individual’s annual income tax return is due on or before 15 April of the following year
- Sec. 74: Quarterly income tax of the self-employed: 15 May, 15 August and 15 November (as amended by TRAIN)
- Sec. 108(A): 12% VAT on gross receipts from the lease of property (as amended by TRAIN and EOPT)
- Sec. 109(1)(Q): VAT exemption for a residential unit leased at ₱15,000 a month or less (as amended by TRAIN)
- Sec. 109(CC): VAT exemption where other gross annual sales do not exceed ₱3,000,000 (as amended by EOPT)
- Sec. 116: 3% percentage tax on persons exempt under Sec. 109(CC) and not VAT-registered; 1% from 1 July 2020 to 30 June 2023
- Sec. 194: Documentary stamp tax on leases of land or buildings (rates since amended by TRAIN)
- Sec. 196: Documentary stamp tax on sales of real property: ₱15 per ₱1,000 or part of it
- Sec. 200(B): Documentary stamp tax return due 10 days after the month the document was made, unless regulations say otherwise
Republic Act No. 10963, Tax Reform for Acceleration and Inclusion (TRAIN) Law
- Sec. 4: Amended NIRC Sec. 6(E): zonal values adjusted every three years
- Sec. 67: Amended NIRC Sec. 194: DST on leases of ₱6 for the first ₱2,000 and ₱2 per ₱1,000 after, each year of the term
- Sec. 69: Amended NIRC Sec. 196: kept ₱15 per ₱1,000 on sales of real property
- Sec. 5: Amended NIRC Sec. 24(A): the 2018–2022 and 2023-onward income tax tables, the 8% option and mixed income
- Sec. 11: Amended NIRC Sec. 34: optional standard deduction of 40% of gross sales or receipts
- Sec. 20: Amended NIRC Sec. 74: quarterly income tax on 15 May, 15 August and 15 November
- Sec. 34: Amended NIRC Sec. 109: residential lease up to ₱15,000 a month exempt; ₱3,000,000 VAT threshold
- Sec. 37: Amended NIRC Sec. 114: VAT returns quarterly from 1 January 2023, 25 days after the quarter
Republic Act No. 11534, Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act
- Sec. 6: Amended NIRC Sec. 27(A): domestic corporations taxed at 25%, or 20% for small ones, from 1 July 2020
- Sec. 12: Amended NIRC Sec. 109: the ₱3,000,000 threshold became paragraph (CC)
- Sec. 13: Amended NIRC Sec. 116: percentage tax cut to 1% from 1 July 2020 to 30 June 2023
Republic Act No. 11976, the Ease of Paying Taxes (EOPT) Act
- Sec. 5: Repealed NIRC Sec. 34(K), so the optional standard deduction is now Sec. 34(K)
- Sec. 18: Amended NIRC Sec. 109(CC): VAT threshold of ₱3,000,000, to be adjusted for inflation every three years
- Sec. 22: Amended NIRC Sec. 114: VAT return and payment 25 days after each quarter
- Sec. 24: Restated NIRC Sec. 116: 3% percentage tax, cooperatives the only exemption
- Sec. 29: Amended NIRC Sec. 128: percentage tax return and payment 25 days after each quarter
- Sec. 34: Amended NIRC Sec. 236: registration, and VAT registration above the threshold
These calculators give estimates for planning. They are not tax or legal advice. Your LGU’s assessor and treasurer, and the Bureau of Internal Revenue, compute the amount you actually owe.
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