VAT OR NON-VAT?

VAT or Non-VAT? A Quick Guide for New Real Estate Brokers

With the 2025 Real Estate Board Exam behind us and new brokers stepping into the field, one of the first decisions they will face is whether to register as a VAT or Non-VAT entity.

Let’s skip the jargon and get straight to the point: Start as NON-VAT.

Here’s why:

1.⁠ ⁠Flexibility is your friend.

If your annual income crosses the VAT threshold, you can always upgrade to VAT status. But going the other way—from VAT back to Non-VAT? It’s a bureaucratic maze. I personally know brokers who’ve been trying (and failing) to revert since 2018.

2.⁠ ⁠Developers and VAT: not always a match.

Some developers require brokers to be VAT-registered before allowing them to sell their inventory—most likely so they can benefit from the VAT input on your commission. However, not all developers have this requirement. For those that do, consider setting up a separate company for VAT purposes rather than registering yourself personally. Why? See #3.

3.⁠ ⁠VAT means more scrutiny, more paperwork.

The BIR keeps a closer eye on VAT-registered entities. You’ll have more tax filings, more compliance headaches, and more chances to get flagged. If you want to keep things simple, go for Optional Standard Deduction (OSD)—which allows you to deduct 40% of your gross receipts without tracking every single expense.