Which purchases count
Input VAT only counts when the seller is VAT-registered, the purchase is for the business, and there's a valid VAT invoice. Carla sorts October's five purchases.
← 4.1 How VAT works: collect, subtract, payOctober's pile of purchases
It's the end of October 2026. Carla has five things Kuting Kitchen paid for this month: cat food stock, Shopee's fees, the warehouse rent, packing boxes, and a supermarket run on the business card.
All five have VAT somewhere in the story. Which ones give input VAT she can subtract on the 2550Q?
Three conditions, all at once
Input VAT counts only when the purchase is:
| ✓ | From a VAT-registered seller. Only they charge VAT. |
|---|---|
| ✓ | For the business. Bought to run Kuting Kitchen, not for someone's home. |
| ✓ | Backed by a valid VAT invoice, with the VAT shown separately. Lesson 3.5 shows what a valid one looks like. |
Miss any one, and there's no input VAT to claim.
Cat food stock: claimable
The supplier is VAT-registered, the cat food is for resale, and its invoice shows ₱6,000 + ₱720 VAT = ₱6,720.
Three ticks: the ₱720 is input VAT.
Shopee's fees: claimable
Marketplace fees are a service bought for the business, from a VAT-registered company. On the ₱480 order, the ₱72 fee holds ₱7.71 of input VAT.
Is the payout report enough? No. You need Shopee's VAT invoice for its fees; the payout report isn't one. Keep the fee invoices from every marketplace with your payout records.
Rent from an individual: no input VAT
The warehouse belongs to a landlord who isn't VAT-registered, so the ₱30,000 rent has no VAT in it. There's nothing to claim.
Does it still go in the books? Yes. It's a business expense, Kuting Kitchen still withholds 5% (Lesson 5), and on the 2550Q it's listed as a purchase with no input tax (item 48).
Boxes with no invoice: no claim
Packing boxes for ₱3,360 came from a VAT-registered supplier, for the business. But the invoice was lost in the warehouse, and all that's left is a bank transfer.
Can the bank transfer stand in for the invoice? No. It shows a payment, not the VAT. No invoice in the file, no claim on the ₱360 VAT. That's why the habit is to file every invoice the day it arrives.
Groceries on the business card: no claim
Carla used the company card for ₱2,240 of household groceries at a VAT-registered supermarket. The invoice is perfect, ₱240 of VAT shown.
But it wasn't bought for the business, so it fails condition 2. It isn't a business expense either.
Ads on Facebook or Google: ask first
Ads bought from foreign platforms follow their own VAT rules for digital services, and they changed recently.
Before claiming any VAT on them, ask your accountant whether and how it can be claimed, and what document you need from the platform.
October, sorted
Of ₱42,392 spent, only two purchases pass all three conditions: ₱727.71 of input VAT.
Do the other three drop out of the books? No. They're still recorded; they just don't reduce the VAT.
Check each purchase when it comes in, not at filing time: that's when you can still ask for a proper invoice.
Pop Quiz: claim or not?
Kuting Kitchen is VAT-registered. Can it claim input VAT on each of these?
Printer ink from a VAT-registered office supplier, VAT invoice in Kuting Kitchen's name.
All three conditions met.
Tricycle fare for a delivery run, no receipt.
No VAT invoice, and a tricycle driver isn't charging VAT.
Lazada's seller fees, with Lazada's VAT invoice for them.
A VAT-registered marketplace, a business service, a VAT invoice: claimable.
Cat treats from a home baker who isn't VAT-registered, with her invoice.
A non-VAT seller charges no VAT, so there's none to claim. It's a purchase with no input tax.
A phone for Carla's daughter, VAT invoice from a VAT-registered store.
Not for the business: fails condition 2.
Shipping boxes, VAT invoice from a VAT-registered supplier, kept in the purchase file.
Three ticks: claimable.
General information for learning, not tax advice. Kuting Kitchen and its purchases are fictional. Some purchases have special rules (imports, services from non-residents, ads on foreign platforms): ask your accountant how to treat them.
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