SIA/TABAG
OCT 2020
TAXATION
TAX 2905. VALUE ADDED TAX
LECTURE NOTES
A. Nature and Characteristics of VAT
v It is a business tax levied on the value-added
on certain goods, properties and services in
the domestic market and/or importer of
goods.
v
It is imposed not on the goods or services as
such but on the privilege of selling or
importing goods or rendering services for a
fee, remuneration or consideration.
v
It is an indirect tax and the amount of tax
may be shifted or passed on to the buyer,
transferee or lessee of the goods, properties
or services.
v
The party directly liable for the payment of
the tax is the seller, importer or the service
provider, although the burden of the tax may
be shifted or passed on to the consumer.
B. EXEMPT TRANSACTIONS
This means the sale of goods, properties or
services and the use or lease of properties are
not subject to VAT (Output Tax) and the seller or
lessor is not allowed to any tax credit on VAT
(Input Tax) on purchases.
The following are VAT exempt transactions as
amended under TRAIN Law:
1) Sale or importation of:
a. agricultural and marine food product in
their original state;
b. livestock and poultry used as, or
producing foods for human consumption;
c. breeding stock and genetic materials.
a.
b.
residents of the Philippines returning from
abroad; and
Non-resident citizens coming to resettle
in the Philippines.
NOTE: Such goods must be exempt from
customs duties.
4) Importation of professional instruments and
implements, tools of trade, occupation or
employment, wearing apparel, domestic animals,
and personal household effects, provided:
a. It belongs to persons coming to settle in the
Philippines, or Filipinos or their families and
descendants who are now residents or citizens
of other countries such parties herein referred
to as overseas Filipinos;
b. In quantities and of the class suitable to the
profession, rank or position of the persons
importing said items;
c. For their own use and not for sale, barter or
exchange;
d. Accompanying such persons, or arriving within
a reasonable time.
Provided, that the Bureau of Customs may,
upon the production of satisfactory evidence
that such persons are actually coming to settle
in the Philippines and that the goods are
brought from their former place of abode,
exempt such goods from payment of duties
and taxes: Provided, further, vehicles, vessels,
aircrafts and machineries and other similar
goods for use in manufacture, shall not fall
within this classification and shall therefore be
subject to duties, taxes and other charges.
5) Services subject to percentage tax
Products that will be considered in their
original state:
a. products
which
undergone
simple
processes of preparation or preservation
for the market (freezing, drying, salting,
broiling, roasting, smoking or stripping)
b. polished or husked rice
c. corn grits
d. raw cane sugar and molasses
e. ordinary salt
f. copra
NOTE: Livestock or poultry does not include
fighting cocks, race horses, zoo animals and
other animals generally considered as pets.
2) Sale or importation of:
a. Fertilizers
b. Seeds, seedlings and fingerlings
c. Fish, prawn, livestock and poultry feeds
d. Ingredients used in the manufacture of
finished feeds (except specialty feeds for
race horses, fighting cocks, aquarium
fish, zoo animals and other animals
generally considered as pets).
3) Importation of personal and household effects
belonging to the:
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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:
ü Laboratory services are exempted.
If the
hospital or clinic operates a pharmacy or
drugstore, the sale of drugs and medicines
are subject to VAT.
ü Hospital bills constitute medical services. The
sales made by the drugstore to the inpatients which are included in the hospital
bills are part of medical bills (not subject to
vat).
ü The sales of the drug store to the outpatients are taxable because they are NOT
PART of medical services of the hospital.
8) Educational services rendered by:
a. private
educational
institutions,
duly
accredited by:
i.
Department of Education (DepEd)
ii.
Commission on Higher Education (CHED)
iii.
Technical
Education
and
Skills
Development Authority (TESDA)
TAX.2905
otherwise
known
as
the
“Urban
Development and Housing Act of 1992”
and other related laws.
“Low-cost housing” refers to housing
projects intended for homeless lowincome family beneficiaries, undertaken
by the Government or private developers,
which may either be a subdivision or a
condominium, registered and licensed by
the Housing and Land Use Regulatory
Board/Housing (HLURB) under BP Blg.
220, PD 957, or any other similar law,
wherein the unit selling price is within the
selling price per unit as set by the
Housing
and
Urban
Development
Coordinating Council (HUDCC) pursuant
to RA 7279, otherwise known as the
“Urban Development and Housing Act of
1992” and other laws.
b. Government Educational Institutions
9) Services rendered by individuals pursuant to an
employer-employee relationship
10) Services rendered
headquarters
by
regional
or
area
11) Transactions which are exempt under
international agreements to which the
Philippines is a signatory or under special
laws
12) For agricultural cooperatives:
a.
b.
c.
Sales to their members
Sales to non-members if the cooperative
is the producer (if not, subject to VAT)
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.
Type of Product
Sale of cooperative’s
own produce
Other than the
cooperative’s own
produce (i.e., from
Traders)
Sale to
Members
Sale to
NonMembers
Exempt
Exempt
Exempt
Subject
to Vat
c.
“Socialized housing” refers to housing
programs and projects covering houses
and lots or home lots only that are
undertaken by the government or the
private sector for the underprivileged and
homeless citizens, which shall include
sites and services development, long-tem
financing, liberalized terms on interest
payments, and as such other benefits in
accordance with the provisions of
Republic Act 7279, otherwise known as
the “Urban Development and Housing Act
of 1992” and RA No. 7835 and RA No.
8763.
“Socialized Housing” shall also
refer to projects intended for the
underprivileged and homeless wherein
the housing package selling price is within
the lowest interest rates under the
Unified Home Lending Program (UHLP) or
any equivalent housing program of the
Government, the private sector or nongovernment organizations.
13) Gross receipts from lending activities by
credit or multi-purpose cooperatives
NOTE:
Exemption is not only limited to the gross
receipts on loans extended to its members
but also to other persons who are not
members.
14) Sales by non-agricultural, non-electric and
non-credit cooperatives, provided, that the
share capital contribution of each member
does not exceed P15,000
NOTE:
Importation by non-agricultural, non-electric
and noncredit cooperatives of machineries
and equipment including spare parts thereof,
to be used by them are subject to VAT.
15) Export sales by persons who are not VATregistered
16) Sale of:
a. Real properties not primarily held for sale
to customers or held for lease in the
ordinary course of trade or business.
However, even if the real property is not
primarily held for sale to customers or
held for lease in the ordinary course of
trade or business but the same is used in
trade or business of the seller, the sale
thereof shall be subject to vat being a
transaction incidental to the taxpayer’s
main business.
b. Real property utilized for low-cost
housing as defined under RA No. 7279,
Page 2 of 20
Real property utilized for “socialized
housing” as defined by Republic Act No.
7279, and other related laws such as RA
No. 7835 and RA No. 8763, wherein the
price ceiling per unit is P450,000 or as
may from time to time be determined by
HUDCC and the NEDA and other related
laws.
d.
Real properties primarily held for sale to
customers or held for lease in the
ordinary course of trade or business, if:
i.
Residential lot valued at P1,500,000;
ii. House and lot, and other residential
dwellings valued at P2,500,000
NOTE:
ü If two or more adjacent residential lots
are sold or disposed in favor of one
buyer, for the purpose of utilizing the lots
as one residential lot, the sale shall be
exempt from vat only if the aggregate
value do not exceed P1,500,000 (as
amended).
Adjacent residential lots,
although covered by separate titles
and/or separate tax declarations, when
sold to one and the same buyer, whether
covered by one separate Deed of
Conveyance, shall be presumed as sale of
one residential lot.
TAX.2905
ü
Provided, that beginning January 1, 2021,
the vat exemption shall only apply to sale
of real properties not primarily held for
sale to customers or held for lease in the
ordinary course of trade or business, sale
of real property utilized for socialized
housing as defined under RA No. 7279,
sale of house and lot and other residential
dwellings with selling price of not more
than two million pesos (P2,000,000);
Provided, further, that every three (3)
years thereafter, the amounts stated
herein shall be adjusted to its present
value using the Consumer Price Index, as
published by the Philippine Statistics
Authority (PSA).
17) Lease of a residential unit with a monthly rental
not exceeding P15,000, regardless of the amount
of aggregated rentals received by the lessor
during the year.
NOTES:
ü LEASE of RESIDENTIAL UNITS where the
monthly rental per unit exceeds P15,000 but
the aggregate of such rentals of the lessor
during the year do not exceed P3,000,000
shall likewise be exempt from VAT, however,
the same shall be subjected to three (3%)
percentage tax (RR 16-2011; RR 13-2018).
ü
In cases where a lessor has SEVERAL
RESIDENTIAL UNITS for LEASE, some are
leased out for a monthly rental per unit of not
exceeding P15,000 while others are leased
out for more than P15,000 per unit, his tax
liability will be:
-
The gross receipts from rentals not
exceeding P15,000 per month per unit
shall be exempt from VAT regardless of
the aggregate annual gross receipts.
-
The gross receipts from rentals exceeding
P15,000 per month per unit shall be
subject to VAT if the annual gross
receipts (from said units only – not
including the gross receipts from units
leased out for not more than P15,000
exceed P3,000,000. Otherwise, the gross
receipts shall be subject to three percent
(3%) percentage tax under section 116 of
the tax code (RR 16-2011; RR 13-2018).
18) Sale, importation, printing or publication of books
and any newspaper, magazine, review or bulletin
which:
a. Appears at regular intervals;
b. With fixed prices for subscription and sale;
c. Not devoted principally to the publication of
paid advertisements.
19) Transport of passengers by international carriers
doing business in the Philippines. The same shall
not be subject to Other Percentage Taxes as
amended under RA10378 and Transport of cargo
by international carriers doing business in the
Philippines, as the same is subject to 3%
common carrier’s tax (Other Percentage Taxes)
as amended under RA10378.
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, that
Page 3 of 20
the exemption from vat on the importation and
local purchase of passenger and/or cargo vessels
shall be subject to the requirements on restriction
on vessel importation and mandatory vessel
retirement program of MARINA (RR 15-2015).
21) "Importation of fuel, goods and supplies by
persons engaged in international shipping or air
transport operations; Provided that/the:
§
Fuel, goods and supplies shall be
exclusively or shall pertain to the
transport of goods and/or passenger 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 of passengers
and/or cargoes that originated from
abroad , or to load passengers and/or
cargoes bound for abroad;
§
If fuel, goods or supplies is used for
purposes other than that mentioned in
the preceding paragraph, such portion of
fuel, goods and supplies shall be subject
to 12% vat.
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) Sale or lease of goods and services to senior
citizens and persons with disabilities, as provided
under RA No. 9994 (Expanded Senior Citizens Act
of 2010) and RA No. 10754 (An Act Expanding
the Benefits and Privileges of Persons with
Disability (PWD), respectively.
24) Transfer of property pursuant to Section 40(C)(2)
of the Tax Code, as amended (Upon effectivity of
RA10963-TRAIN Law on January 1, 2018; new
provision).
25) Association dues, membership fees, and other
assessments and charges collected on a purely
reimbursement
basis
by
homeowners’
associations and condominium corporations
established under RA No. 9904 (Magna Carta for
Homeowners’ and Homeowners Association) and
RA No. 4726 (Condominium Act), respectively.
This provision shall take effect only beginning
January 1, 2018 or upon the effectivity of
RA10963-TRAIN Law (new provision).
26) Sale of Gold to the Bangko Sentral ng Pilipinas
(BSP).
This provision shall take effect only
beginning January 1, 2018 or upon the effectivity
of RA10963-TRAIN Law (new provision).
27) Sale of drugs and medicines prescribed for
diabetes, high cholesterol, and hypertension
beginning January 1, 2019 (new provision)
28) "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
P3,000,000,
as
amended
(previously
P1,919,500).
TAX.2905
C. VAT REGISTRATION
2.
1) MANDATORY REGISTRATION
The following persons are required to register:
a. Any person or entity who, in the course of his
trade or business, sells, barters, exchanges,
leases goods or properties and renders services
subject to VAT, if the aggregate amount of actual
gross sales or receipts exceed P3,000,000 (as
amended) in the current year (other than
those that are exempt).
b.
3.
Radio and/or television broadcasting companies
whose annual gross receipts of the preceding
year exceeds P10,000,000.
Penalty for non-registration of those
required to register as VAT?
He shall be liable to pay the tax as if he were
a VAT-registered person but he cannot avail
the benefits of input tax credit for the period
he was not properly registered.
v
PERSONS LIABLE - Any person who, in the course of
his trade or business:
1. Sells, barters or exchanges goods or properties
(Seller of Goods or Properties)
2. Leases goods or properties (Lessor)
3. Renders services (Service Provider)
v
MEANING OF “IN THE COURSE OF TRADE OR
BUSINESS” – the regular conduct or pursuit of a
commercial
or
economic
activity,
including
transactions incidental thereto, by any person
regardless of whether or not the person engaged
therein is a non-stock, non-profit private organization
(irrespective of the disposition of its net income and
whether or not it sells exclusively to members or
their guests), or government entity.
Any person who is VAT-registered but enters into
transactions which are exempt from VAT (mixed
transactions) may opt that the VAT apply to his
transactions which would have been exempt.
Franchise
grantees
of
radio
and/or
television broadcasting whose annual gross
receipts of the preceding year do not exceed ten
million pesos (P10,000,000.00) derived from the
business covered by the law granting the
franchise may opt for VAT registration. This
option, once exercised, shall be irrevocable.
(Sec. 119, Tax Code).
The above-stated taxpayers may apply for VAT
registration not later than ten (10) days before
the beginning of the calendar quarter and shall
pay the registration fee unless they have already
paid at the beginning of the year. In any case,
the Commissioner of Internal Revenue may, for
administrative reason deny any application for
registration. Once registered as a VAT person,
the taxpayer shall be liable to output tax and be
entitled to input tax credit beginning on the first
day of the month following registration.
3) CANCELLATION OF VAT REGISTRATION
Instances when a VAT-registered person
may cancel his VAT registration:
1. If he makes a written application and can
demonstrate to the commissioner's
satisfaction that his gross sales or receipts for
the following twelve (12) months, other than
those that are exempt, will not exceed
P3,000,000; or
Page 4 of 20
POWER OF THE COMMISSIONER TO SUSPEND
BUSINESS OPERATIONS:
v The Commissioner of the Internal Revenue or
his authorized representative may order
suspension or closure of business
establishment for a period of not less than 5
days for any of the following violations:
1. Failure to issue receipts or invoices
2. Failure to file vat return
3. Understatement of taxable sales or
receipts by 30% or more of the
correct taxable sales or receipts for
the taxable quarter.
4. Failure of any person to register as
required under the law.
D. VAT FOR SELLER OF GOODS, PROPERTIES AND
SERVICES
2) OPTIONAL REGISTRATION
Any person who is VAT-exempt or not
required to register for VAT, in relation to
B.28 above may, elect to be VAT-registered by
registering with the RDO that has jurisdiction
over the head office of that person, and pay the
annual registration fee of P500.00 for every
separate and distinct establishment. Any person
who elects to register under optional registration
shall not be allowed to cancel his registration for
the next three (3) years.
If he has ceased to carry on his trade or
business, and does not expect to
recommence any trade or business within the
next twelve (12) months.
The
rule
of
regularity,
to
the
contrary
notwithstanding, services rendered in the Philippines
by a non-resident foreign persons shall be considered
as being rendered in the course of trade or business.
v
FORMULA:
Output Tax
Input Tax
VAT Payable (Excess Input Tax)
E. OUTPUT TAX
PROPERTIES
v
OF
SELLER
PXXX
(XX)
PXXX
OF
GOODS
OR
KINDS OF SALE OF GOODS OR PROPERTIES SUBJECT
TO VAT:
1. Actual Sale
2. Transactions deemed sale:
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 VAT-registered person
withdraws goods from his business for his
personal use;
b) Distribution or transfer to:
i.
Shareholders or investors share in the
profits of VAT-registered person;
ii.
Creditors in payment of debt;
c) Consignment of goods if actual sale is not
made within 60 days following the date such
goods were consigned; and
TAX.2905
d) Retirement from or cessation of business with
respect to all goods on hand, whether capital
goods, stock-in-trade, supplies or materials
as of the date of such retirement or
cessation, whether or not the business is
continued by the new owner or successor.
v
Installment Plan – means sale of real property, the initial
payment of which in the year of sale do not exceed 25%
of the gross selling price.
COMPONENTS OF INITIAL PAYMENT:
FORMULA IN COMPUTING OUTPUT TAX
Tax Base
Rate
Output Tax
Down payment
Other collections in the year of sale
Excess of unpaid mortgage over cost
Initial Payments
PXXX
XX%
PXXX
v
v
TAX BASE
Actual Sale
Personal property
Real Property
1. Cash Sale
2. Deferred
Payment Basis
3. Installment Plan
Transaction Deemed Sale
1. (a), (b) and (c)
above
2. (d) above
GSP
GSP vs. FMV vs. ZV
w/c ever is the highest
[(Collection/GSP)
x
GSP vs. FMV vs. ZV
w/c ever is the highest]
FMV
AC vs. NRV (w/c ever
is lower)
GSP – Gross Selling Price
FMV – Fair market value
ZV – Zonal Value
NRV – Net realizable value
AC – Acquisition Cost
Gross Selling Price – means the total amount of money
or its equivalent which the purchaser pays or is obligated
to pay to the seller in consideration of the sale, barter or
exchange of the goods or properties, excluding VAT.
The excise tax, if any, on such goods or properties shall
form part of the gross selling price.
NOTE: The following shall be allowed as deductions from
gross selling price;
a) Sales discount indicated in the invoice at the time
of sale, the grant of which is not dependent upon
the happening of a future event; and
b) Sales returns and allowances for which a proper
credit or refund was made for sales previously
recorded as taxable sales.
DEFINITION OF GROSS SELLING PRICE EXPRESSED IN A
FORMULA:
Gross Sales
Less: Sales discount
Sales returns & allowances
Net Sales
Add: Excise tax
Tax Base
PXXX
XX
XX
XX
PXXX
XX
PXXX
Fair Market Value – means fair market value as shown in
the schedule of values of the Provincial and City
Assessors (real property tax declaration).
Zonal Value – means fair market value as determined by
the BIR Commissioner.
Deferred Payment Basis - means sale of real property,
the initial payments of which in the year of sale exceed
25% of the gross selling price.
Page 5 of 20
PXXX
XXX
XXX
PXXX
RATE - As a general rule, the rate of value-added tax
for the sale of goods or properties is 12% (Local
Sales). However, the following transactions are
subject to 0% (ZERO-RATED SALES):
1) Export Sales:
a. Sale and actual shipment of goods from the
Philippines to a foreign country, paid for in
acceptable currency, and accounted for in
accordance with the rules and regulations of
the BSP;
b. Sale of raw materials or packaging materials
to a non-resident buyer for delivery to a
resident local export oriented enterprise to be
used in manufacturing, processing, packing
or repacking in the Philippines of the said
buyer’s goods, paid for in acceptable
currency, and accounted for in accordance
with the rules and regulations of the BSP;
c. Sale of raw materials or packaging materials
to an export-oriented enterprise whose
export sales exceed 70% of total annual
production;
d. Transactions considered export sales under
E.O. No. 226;
ART. 23 EO 226
That without actual exportation the following
shall
be
considered
constructively
exported for purposes of this provision:
ü sales
to
bonded
manufacturing
warehouses
of
export-oriented
manufacturers;
ü sales to export processing zones;
ü sales to registered
export traders
operating bonded trading warehouses
supplying raw materials used in the
manufacture of export products under
guidelines to be set by the Board in
consultation with the Bureau of Internal
Revenue and the Bureau of Customs;
ü sales to foreign military bases, diplomatic
missions and other agencies and/or
instrumentalities granted tax immunities,
of locally manufactured, assembled or
repacked products whether paid for in
foreign currency or not: Provided, further,
that export sales of registered export
traders may include commission income:
and Provided, finally, that exportation of
goods on consignment shall not be
deemed export sales until the export
products consigned are in fact sold by the
consignee.
ü Sales
of
locally
manufactured
or
assembled goods for household and
personal use to Filipinos abroad and other
non-residents of the Philippines as well as
returning Overseas Filipinos under the
Internal
Export
Program
of
the
government and paid for in convertible
foreign
currency
inwardly
remitted
TAX.2905
through the Philippine banking systems
shall also be considered export sales.
Items 1(b), 1(c) and 1(d) above will be
subject to 12% vat under Sec. 31 of RA10963
(TRAIN Law) upon satisfaction of the
following:
§
§
e.
Successful
establishment
and
implementation of an enhance refund
system that grants refunds of creditable
input tax within 90 days from the filing of
the vat refund application with the BIR;
Provided that, all applications filed from
January 1, 2018 shall be processed and
decided within 90 days from the filing of
the vat refund application.
the pronouncement by the DOF, the vat zerorating incentive being enjoyed by PEZA locators
or entities shall remain in full force and effect.
F.
OUTPUT TAX OF SELLER OF SERVICES AND
LESSOR OF GOODS OR PROPERTIES
v
FORMULA IN COMPUTING OUTPUT TAX
Gross Receipts
PXXX
Rate
XX%
Output Tax
PXXX
v
Gross Receipts – refers to the total amount of money
or its equivalent representing the contract price,
compensation, service fee, rental or royalty, including
the amount charged for materials supplied with the
services and deposits applied as payments for
services rendered and advance payments actually or
constructively received for the services performed or
to be performed for another person, excluding VAT.
The ninety (90) day period to process and
decide, pending the establishment of the
enhanced VAT Refund System shall only
be up to the date of approval of the
Recommendation
Report
on
such
application for VAT refund by the
Commissioner or his duly authorized
representative; Provided; that all claims
for refund/tax credit certificate filed prior
to January 1, 2018 will be governed by
the one-hundred (120)-day processing
period. and
All pending vat refund claims as of Dec.
31, 2017 shall be fully paid in cash by
Dec. 31, 2019.
Advance Payments. In a lease contract, advance
payment by the lessee may be:
1. A loan to the lessor from the
lessee.
2. An option money for the
NOT
property.
subject to
3. A security deposit to insure the
VAT
faithful performance of certain
obligations of the lessee to the
lessor.
4.
Sale of goods, supplies, equipment and fuel
to persons engaged in international shipping
or international air transport operations.
Cash received (actually and constructively)
Advance payments
Materials charged for services
Gross receipts
2.
NOTE: A zero-rated sale of goods or properties is
a taxable transaction for VAT purposes, but shall
not result in any output tax. However, the input
tax on purchases of goods, properties or services,
related to such zero-rated sale, shall be available
as tax credit or refund.
DOF Memorandum Circular No. 2018-003
declared “status quo” on vat-zero rating incentive
on the sale of goods/services to separate customs
territories. It further provides that Section 8 of
the PEZA Law, which provides that special
economic zones are to be operated and managed
as a separate customs territory, was not
amended
or
repealed
by
TRAIN
Law.
Consequently, until a law or revenue regulation is
passed or issued contrary to or incompatible with
Page 6 of 20
PXXX
XXX
XXX
PXXX
NOTE:
1. For Dealer in Securities, the term “gross receipts”
means gross selling price less cost of
securities sold.
Sales of goods or property to persons or
entities who are tax-exempt under
international agreements to which the
Philippines is a signatory, such as:
Asian Development Bank (ADB)
International Rice Research Institute
(IRRI)
STATUS QUO ON VAT ZERO-RATING OF
SALES TO PEZA ENTITIES
Subject
to VAT
DEFINITION OF GROSS RECEIPTS EXPRESSED IN A
FORMULA:
2) Sales to Persons or Entities Deemed Tax-exempt
under Special Law or International Agreement:
a. Sales of goods or property to persons or
entities who are tax-exempt under special
laws, such as:
Subic Bay Metropolitan Authority (SBMA)
Philippine Economic Zone Authority
(PEZA)
b.
Prepaid rental
v
“Constructive receipt” occurs when the money
consideration or its equivalent is placed at the
control of the person who rendered the service
without restrictions by the payor. The following
are examples of constructive receipts:
a) Deposits in banks which are made available
to the seller of services without restrictions;
b) Issuance by the debtor of a notice to offset
any debt or obligation and acceptance thereof
by the seller as payment for services
rendered; and
c) Transfer of the amounts retained by the
payor to the account of the contractor.
RATE - As a general rule, the rate of value-added tax
for the sale of services and lease of goods or
properties is 12%. However, the following
transactions are subject to 0% (ZERO-RATED
SALES):
1.
Processing, manufacturing or repacking goods for
other persons doing business outside the
Philippines, which goods are subsequently
exported, where services are paid for in
acceptable foreign currency and accounted for in
TAX.2905
accordance with the rules and regulations of the
BSP;
2.
Services performed by subcontractors and/or
contractors
in
processing,
converting,
or
manufacturing goods for an enterprise whose
export sales exceed 70% of the total annual
production;
v
1.
2.
REQUISITES:
The taxpayer is a VAT-registered person; and
The input tax is related to business subject to VAT
(12% or 0%).
v
KINDS OF INPUT TAX
1. Input tax on local purchases of goods or
properties other than capital goods;
2. Input tax on importation of goods or properties
other than capital goods;
3. Input tax on local purchases or importation of
capital goods;
4. Input tax on local purchases of services;
5. Creditable withholding VAT
6. Transitional input tax
7. Presumptive input tax
v
INPUT TAX ON LOCAL PURCHASES OR IMPORTATION
OF CAPITAL GOODS
Transactions #1 and #2 above will be subject
to 12% vat from the effectivity of RA10963 upon
satisfaction of the following:
§
Successful
establishment
and
implementation of an enhanced refund
system that grants refunds of creditable
input tax within 90 days from the filing of
the vat refund application with the BIR;
Provided that, all applications filed from
January 1, 2018 shall be processed and
decided within 90 days from the filing of
the vat refund application.
Capital Goods – refer to depreciable properties in
which the useful life is more than one (1) year.
The ninety (90) day period to process and
decide, pending the establishment of the
enhanced VAT Refund System shall only
be up to the date of approval of the
Recommendation
Report
on
such
application for VAT refund by the
Commissioner or his duly authorized
representative; Provided; that all claims
for refund/tax credit certificate filed prior
to January 1, 2018 will be governed by
the one-hundred (120)-day processing
period. and
§
3.
4.
When is amortization required?
Purchases or importation of capital goods, the
aggregate acquisition cost of which (net of VAT) in a
calendar month exceeds P1,000,000, regardless of
the acquisition cost of each capital good, shall be
amortized.
Amount Deductible = Input Tax/Amortization period
NOTE:
1. Amortization period is the shorter period of the
following:
a) 60 months
b) Useful life in months
All pending vat refund claims as of Dec.
31, 2017 shall be fully paid in cash by
Dec. 31, 2019.
Services other than processing, manufacturing or
repacking goods for other persons engaged in
business who is outside the Philippines when the
services are performed, the consideration for
which is paid for in acceptable foreign currency
and accounted for in accordance with the rules
and regulations of the BSP;
Services rendered to persons or entities whose
exemption under special laws or international
agreements to which the Philippines is a
signatory effectively subjects the supply of
services to zero percent (0%) rate;
5.
Services rendered to persons engaged in
international shipping or air transport operations,
including leases of property for use thereof;
6.
Transport of passengers and cargo by domestic
air or sea carriers from the Philippines to a
foreign country; and
7.
Sale of power or fuel generated through
renewable sources of energy such as, but not
limited to:
a) Biomass
b) Solar
c) Wind
d) Hydropower
e) Geothermal and Steam
f) Ocean energy
g) Other emerging sources using technologies
such as fuel cells and hydrogen fuels.
v
G. INPUT TAX
Page 7 of 20
2.
If the 1M threshold is not breached, no need for
amortization (Input Tax is 100% deductible).
3.
If the CAPITAL GOOD IS SOLD within the five (5)
year period or prior to exhaustion of Input Vat
thereon, the ENTIRE UNAMORTIZED INPUT TAX
on the capital goods sold can be claimed as input
tax credit during the month or quarter when the
sale is made.
4.
Construction in Progress is a purchase of service.
Input taxes will be recognized in the month
payment was made on the progress billing. In
the case where labor will be furnished by the
contractor and materials will be purchased by the
contractee from other suppliers, input taxes will
be recognized on labor when payment is made on
the progress billings while input taxes will be
recognized on materials at the time the materials
are purchased.
CREDITABLE WITHHOLDING VAT
Non-resident persons who perform services in the
Philippines are deemed to be making sales in the
course of trade or business, even if the performance
of services is not regular.
The recipient of the service is the one required to
withhold and remit the VAT to the BIR. Such VAT can
be claimed by the recipient as input tax.
v
TRANSITIONAL INPUT TAX
Persons Covered:
TAX.2905
Taxpayers who became VAT-registered persons
(previously non-VAT) shall be entitled to a
transitional input tax.
Amount Deductible:
Beginning Inventory
Rate
Actual Input VAT, Inventory beg.
Transitional Input Tax (Higher Amount)
I.
FINAL WITHHOLDING VAT
v
The government or any of its political
subdivisions,
instrumentalities
or
agencies,
including GOCCs shall, before making payment on
account of each purchase of goods and or
services taxed at 12% VAT, deduct and withhold
a Final VAT due at the rate of five percent (5%)
of the gross payment.
v
The 5% final VAT shall represent the net VAT
payable to the seller. The remaining 7%
effectively accounts for the standard input VAT of
the seller, in lieu of the actual input VAT.
v
The difference between actual input VAT and
standard input VAT must be closed to expense or
cost.
PXXX
2%
PXXX
XXX
PXXX
NOTE: Beginning inventory will include all inventories
related to business subject to VAT regardless of
whether or not it was purchased from VAT or nonVAT supplier.
v
PRESUMPTIVE INPUT TAX
Persons Covered:
Persons or firms engaged in:
1. Processing of sardines, mackerel and milk; and
2. Manufacturing refined sugar, cooking oil and
packed noodle-based instant meals.
J.
Refer to a situation wherein the taxpayer is engaged
in transactions subject to VAT (12% and/or 0%) as
well as not subject to VAT (exempt). The main
concern in such a case is the determination of input
tax that can be claimed for VAT purposes.
Amount Deductible:
Purchases of Primary Agricultural Products
Rate
Presumptive Input Tax
PXXX
4%
PXXX
A Vat registered person who is also engaged in
transactions not subject to Vat shall be allowed of
Input tax credit as follows:
1. Total input tax which can be directly attributed
to transactions subject to vat (except vat taxable
sales of goods and services to the government or
GOCCs); and
2. Ratable Portion of any input tax which cannot be
directly attributed to either activity. (allocation
shall be on the basis of sales volume.)
H. VAT ON IMPORTATION
v
PERSONS LIABLE:
1. Any person who bring goods into the Philippines,
whether or not made in the course or his trade or
business.
2. It includes non-exempt persons or entities who
acquire tax-free imported goods from exempt
persons, entities or agencies.
K. EXCESS INPUT TAX
NOTE: In case of goods imported into the Philippines
by VAT-exempt persons, entities or agencies which
are subsequently sold, transferred or exchanged in
the Philippines to non-exempt persons or entities, the
latter shall be considered the importers thereof and
shall be liable for VAT due on such importation
v
MIXED BUSINESS TRANSACTIONS
KINDS OF INPUT TAX
Related to sales subject
to 12% VAT
TREATMENT
Carry-over
Related to 0% VAT
a) Carry-over
b) Refund
c) Convert into tax credit
certificate
In case of cancellation of
VAT registration
a) Convert into tax credit
certificate only.
b) In case it has no other
tax liability, refund.
FORMULA:
a) Customs duties is ad valorem (based on value):
Dutiable Value
Customs duties
Excise tax
Other charges w/in BOC
Tax Base
Rate
VAT on Importation
PXXX
XXX
XXX
XXX
PXXX
12%
PXXX
b) Customs duties is specific (based on quantity or
volume):
Invoice amount
Customs duties
Freight
Insurance
Other charges w.in BOC
Landed Cost
Excise tax
Total or Tax Base
Rate
VAT on Importation
Page 8 of 20
PXXX
XXX
XXX
XXX
XXX
PXXX
XXX
PXXX
12%
PXXX
v
RULE ON CARRY-OVER OF EXCESS INPUT TAX
1.
Excess input tax in the 1st month of the quarter can
be carried over to the 2nd month.
2.
Excess input tax in the 2nd month CANNOT be carried
over to the 3rd month (Quarterly VAT).
3.
Excess input tax in the 3rd month may be carried over
to the:
a) 1st month of the subsequent quarter; and
b) 3rd month of the subsequent quarter
v
RULE ON REFUND OR CONVERSION TO TAX
CREDIT CERTIFICATE
1.
Zero-Rated Sales - File application with the BIR
within 2 years from the end of the taxable
quarter.
TAX.2905
2.
Cancellation of VAT registration – File
application with the BIR within 2 years from date
of cancellation.
reside therein, and whose immigrant visa has been
surrendered to the foreign government.
NOTE: Refund shall be granted within 90 days
from the date of submission of complete
documents.
L.
VAT Exempt Sales to Senior Citizens (Section 4,
RR 7-2010)
ADVANCE PAYMENT OF VAT
Raw sugar and refined sugar under RR 6-2015, shall
be subject to advance payment of VAT, by the
owner/seller before the sugar is withdrawn from any
sugar refinery/mill.
v
BASE PRICE:
The amount of advance vat payment shall be
determined by applying the vat rate of twelve
percent (12%) on the applicable base price of
P1,400 per 50 kg. bag for refined sugar and
P1,000 per 50 kg. bag for all other types of
sugar.
v
EXEMPT FROM ADVANCE VAT PAYMENT
§
Withdrawal of raw cane sugar
§
Withdrawal of sugar by duly accredited and
registered agricultural cooperative of good
standing
§
Withdrawal of sugar by duly accredited and
registered agricultural cooperative which is
sold to another agricultural cooperative
v
WITHDRAWAL OR TRANSFER
The proprietor of a sugar refinery/mill shall not
allow the issuance of quedan/warehouse receipts
or other evidence of ownership or allow any
withdrawal of sugar from its premises without
proof of payment of advance vat.
v
CREDIT FOR ADVANCE PAYMENT
In addition to input tax credits under Section 110
of the Tax Code, the amount of advance payment
of vat made by sellers of sugar under revenue
regulations 6-2015 shall be allowed as credit
against the output tax based on the actual gross
selling price of sugar. The corresponding liability
on value added tax shall therefore be computed
as follows:
Output Vat
Less: Input Vat on Purchases
Advance Vat Payment
Vat Payable (Excess input vat)
Pxx
(xx)
(xx)
Pxx
M. VAT and DISCOUNTS FOR SENIOR CITIZENS
Senior citizen or Elderly - refers to any Filipino citizen
who is a resident of the Philippines, sixty (60)
years old or above. It may apply to senior citizens
with “dual citizenship” status provided they prove
their Filipino citizenship and have at least six (6)
months residency in the Philippines (RA 9994
otherwise known as “Expanded Senior Citizens Act of
2010” and its related revenue regulations/ circulars
RR7-2010, RR 8-2010, RMC 38-2012).
Resident Citizen — a Filipino Citizen with permanent/
legal residence in the Philippines, and shall include
one, who, having migrated to a foreign country, has
returned to the Philippines with a definite intention to
Page 9 of 20
The following items sold to a senior citizen are vatexempt and will entitle the latter to a minimum
discount of 20%:
a) Medicine and Drug Purchases including influenza
and pneumococcal vaccines and such other
essential medical supplies, accessories and
equipment.
b) Professional fees of attending physicians in all
private hospitals, medical facilities, outpatient
clinics and home health care services.
c) Professional fees of licensed health workers
providing home health care services in all private
hospitals, medical facilities, outpatient clinics, and
home health care services
d) Medical and dental services, diagnostic and
laboratory fees
e) On actual fare for land transportation travel
f) In actual fare for domestic air transport and sea
shipping vessels and the like
g) On the utilization of services in hotels and similar
lodging establishments, restaurants, recreation
centers
h) On admission fees charged by theaters, cinema
houses and concert halls, circuses, carnivals and
other similar places of culture, leisure and
amusement.
i) On funeral and burial services of senior citizens.
RULE FOR RESTAURANTS
The discount shall be for the sale of food, drinks,
dessert and other consumable items served by the
establishments,
including
value
meals
and
promotional meals, offered for the consumption of
the general public. Condiments and side products fall
within the ambit of “other consumable items served
by the establishments”.
The 20% discount and vat exemption for restaurants
shall apply to:
§
Dine in, take-out, take-home, drive-thru,
delivery orders (excluding bulk orders),
called-in or phoned-in orders. Bulk orders
are within the context of pre-contracted or
pre-arranged group meals or packages, and
hence, not entitled to 20% discount and VAT
exemption.
§
Set meals, group meals or group walk-ins
including purchase of a whole cake and pizza
orders.
§
“Pasalubong” food items which are singleserving/solo meal for the personal and
exclusive consumption of the Senior Citizen.
However, other “pasalubong” food items
(e.g. box of biscocho, bottles or jars of
ginamos,
several
packets
of
mango
preserves, etc) which are not for the
personal and exclusive consumption of the
Senior Citizen are NOT entitled to 20%
discount and VAT exemption. This limitation
extends to “novelty items” or nonconsumables sold in restaurants.
TAX.2905
§
§
§
FORMULAs:
§
Disct. = (Total Billing Amount – VAT) x 20%
§
Amount Due:
Total bill inclusive of vat
Less: vat
Total bill exclusive of vat
Less: 20% discount
Total Amount Due
**Dsct.=
Total Billing Amt.
No. of customers
Less VAT x 20%
**Use the above formula in the following cases:
§
The bill is for a group of individuals
involving non-senior citizens and a senior
citizen
§
In case of set meal(s) not limited to a
single serving and is shared with NonSenior Citizens.
§
For group of diners composed of Senior
Citizens who ordered for group meals or
food items for sharing in restaurants and
not all the Senior Citizens have their valid
Senior Citizen’s ID cards (including
purchase of whole cake and pizza).
I.
Grant of 5% Special Discount (Section 5, RR
7-2010 as amended by RR 8-2010 and RMC
38-2012).
A special discount of five percent (5%) of the
regular retail price of basic necessities and
prime commodities as defined under Section 2
of the joint DTI-DA Administration Order No. 1002, series of 2010, shall be granted to Senior
Citizens on their purchases thereof, taking into
consideration that said purchases shall be for the
personal and exclusive consumption and/or
enjoyment of the Senior Citizen (Section 3, Joint
DTI-DA Administrative Order No. 10-02, Series of
2010).
a) Basic Necessities
§
Rice
§
Corn
§
Bread excluding pastries and cakes
§
Fresh, dried and canned fish and
other marine products
§
Fresh pork, beef and poultry meat
§
Fresh eggs
§
Fresh and processed milk
§
Fresh vegetables including root crops
§
Coffee and coffee creamer
§
Sugar
§
Cooking oil
§
Salt
§
Powdered, liquid, bar laudry and
detergent soap
§
Firewood
§
Charcoal
§
Candles
b) Prime
§
§
§
§
§
§
§
§
§
Page 10 of 20
§
Pxx
(xx)
Pxx
(xx)**
Pxx
Commodities
Fresh fruits
Flour
Dried, processed and canned pork,
beef and poultry meat
Dairy products not falling under basic
necessities
Canned sardines, tuna
Noodles
Onions
Garlic
Geriatric diapers
§
§
§
Herbicides
Poultry, swine and cattle feeds
Veterinary products for poultry, swine
and cattle
Nipa shingle, plyboard and
construction nails
Batteries
Electrical supplies and light bulbs
Steel wire
Retailers – shall mean any natural or juridical
person engaged in the business of selling
consumer products directly to consumers, which
shall include among others, supermarkets,
grocery/convenience stores and shops but
excluding stalls in food courts, food carts and
sari-sari stores with a capitalization of less than
P100,000, public and private wet markets,
talipapa and cooperative stores.
Purchase of basic necessities and prime
commodities are not exempt from vat. The
total amount of purchases shall not exceed
P1,300 per calendar week without carry-over of
unused amount. A purchase booklet issued by
OSCA shall be presented to the retailer upon
purchase of basic necessities and prime
commodities.
NOTE:
§
The input tax attributable to the exempt sale
shall not be allowed as an input tax credit
and must be closed to cost or expense
account by the seller (Sec. 10, RR 7-2010).
§
While RA 9994 expressly provides for the VAT
exemption of Senior Citizens on their
purchase of certain goods and services, the
law does not include exemption from the
payment of Percentage Tax.
§
In the purchase of goods and services which
are on promotional discount, the Senior
Citizen shall avail of either the promotional
discount or the 20%/5% discount, whichever
is higher. However, the discount that must be
given to the Senior Citizen shall in no case be
less than 20%/5%. Moreover, the sale of
goods and services on promotional discount is
still exempt from VAT (except sale of basic
necessities and prime commodities).
§
Meals primarily prepared and intentionally
marketed for children and not for Senior
Citizen’s personal consumption are not
entitled to 20% discount. (Rule IV, Article 7,
Section 3(d) of the Rules and Regulations
implementing RA No. 9994; Section 6 of RR
No. 7-2010).
§
Generally, alcoholic beverages are not subject
to the 20% discount and VAT exemption
especially if purchased “in bulk”, “in buckets”
or “in cases”. However, if served as a single
serving drink, its purchase by a Senior Citizen
is entitled to the 20% discount and VAT
exemption. However, alcoholic beverages
purchased in a bar, club or cabaret are
exempt from VAT but subject to amusement
tax of 18% under Section 125 of the NIRC, as
amended. A Senior Citizen may still avail of
the 20% discount on the purchase of an
alcoholic drink but the discount shall be
limited only to a single serving of an alcoholic
beverage.
TAX.2905
§
Cigarettes/cigars are not the food or essential
items entitled to the 20% discount.
§
Toll fees are not the same as “fares”. Hence,
it is not subject to the 20% Senior Citizen
Discount.
N. PERSONS WITH DISABILITY (RA7277-Magna
Carta for Persons with Disability as amended
under RA 9442 and RA10754;)
A person with disability shall refer to an individual
suffering from restriction or different abilities, as a
result of mental, physical or sensory impairment to
perform an activity in a manner or within the range
considered normal for human being (RR 1-2009).
Persons with disability shall be entitled to:
(a) At least twenty percent (20%) discount and
exemption from the value-added tax (VAT), if
applicable, on the following sale of goods and
services for the exclusive use and enjoyment or
availment of the PWD:
(1) On the fees and charges relative to the
utilization of all services in hotels and similar
lodging
establishments;
restaurants
and
recreation centers;
(2) On admission fees charged by theaters,
cinema houses, concert halls, circuses, carnivals
and other similar places of culture, leisure and
amusement;
(3) On the
drugstores;
purchase
of
medicines
in
all
(4) On medical and dental services including
diagnostic and laboratory fees such as, but not
limited to, x-rays, computerized tomography
scans and blood tests, and professional fees of
attending doctors in all government facilities,
subject to the guidelines to be issued by the
Department of Health (DOH), in coordination with
the Philippine Health Insurance Corporation
(PhilHealth);
(5) On medical and dental services including
diagnostic and laboratory fees, and professional
fees of attending doctors in all private hospitals
and medical facilities, in accordance with the
rules and regulations to be issued by the DOH, in
coordination with the PhilHealth;
(6) On fare for domestic air and sea travel;
(7) On actual fare for land transportation travel
such as, but not limited to, public utility buses or
jeepneys (PUBs/PUJs), taxis, asian utility vehicles
(AUVs), shuttle services and public railways,
including light Rail Transit (LRT), Metro Rail
Transit (MRT) and Philippine National Railways
(PNR); and
(8) On funeral and burial services for the death of
the PWD: Provided, That the beneficiary or any
person who shall shoulder the funeral and burial
expenses of the deceased PWD shall claim the
discount under this rule for the deceased PWD
upon presentation of the death certificate. Such
expenses shall cover the purchase of casket or
urn, embalming, hospital morgue, transport of
the body to intended burial site in the place of
Page 11 of 20
origin, but shall exclude obituary publication and
the cost of the memorial lot.
(b) Educational assistance to PWD, for them to
pursue primary, secondary, tertiary, post tertiary,
as well as vocational or technical education, in
both public and private schools, through the
provision of scholarships, grants, financial aids,
subsidies and other incentives to qualified PWD,
including support for books, learning materials,
and uniform allowance to the extent feasible:
Provided, That PWD shall meet the minimum
admission requirements;
(c) To the extent practicable and feasible, the
continuance of the same benefits and privileges
given by the Government Service Insurance
System (GSIS), Social Security System (SSS),
and Pag-IBIG, as the case may be, as are
enjoyed by those in actual service;
(d) To the extent possible, the government may
grant special discounts in special programs for
PWD on purchase of basic commodities, subject
to the guidelines to be issued for the purpose by
the Department of Trade and Industry (DTI) and
the Department of Agriculture (DA); and
“(e) Provision of express lanes for PWD in all
commercial and government establishments; in
the absence thereof, priority shall be given to
them.
The abovementioned privileges are available only to PWD
who are Filipino citizens upon submission of any of the
following as proof of his/her entitlement thereto:
(i) An identification card issued by the city or
municipal mayor or the barangay captain of the
place where the PWD resides;
(ii) The passport of the PWD concerned; or
(iii) Transportation discount fare Identification
Card (ID) issued by the National Council for the
Welfare of Disabled Persons (NCWDP).
The privileges may not be claimed if the PWD claims a
higher discount as may be granted by the commercial
establishment and/or under other existing laws or in
combination with other discount program/s.
“The establishments may claim the discounts granted in
subsection (a), paragraphs (1), (2), (3), (5), (6), (7),
and (8) as tax deductions based on the net cost of the
goods sold or services rendered: Provided, however, That
the cost of the discount shall be allowed as deduction
from the gross income for the same taxable year that the
discount is granted: Provided, further, That the total
amount of the claimed tax deduction net of value-added
tax, if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper
documentation and to the provisions of the National
Internal Revenue Code (NIRC), as amended.
O. Grant of 5% Special Discount to PWDs (RR 9-2019).
“Every PWD shall enjoy a special discount of five percent
(5%) of the regular retail price, without exemption from the valueadded tax (VAT) of basic necessities and prime commodities”. The
discount is limited to purchases not exceeding to P1,300 “per
calendar week without carry-over of the unused amount”. Provided
that said amount shall be spent on basic necessities and prime
commodities commensurable to his/her personal exclusive
consumption and or enjoyment within the calendar week. Provided,
further that said amount shall be spent on at least four kinds of items
listed as basic necessities and prime commodities.
TAX.2905
Basic necessities refer to goods “vital to the needs of
consumers, for their sustenance and existence” while prime
commodities are goods that are “essential” to them. Necessities
include rice, corn, root crops, bread, fresh, dried or canned fish and
other marine products; fresh pork, beef and poultry meat; fresh eggs,
potable water in bottles and containers; fresh and processed milk;
fresh vegetables and fruits; locally manufactured instant noodles;
coffee, coffee creamer; sugar, cooking oil, salt, laundry soap,
detergent, firewood, charcoal, candles, household liquefied petroleum
gas and kerosene.
Basic necessities shall include:
1. All kinds and variants of rice
2. Corn
3. All kinds of bread (pastries and cakes not included)
4. Fresh, dried and canned fish and other marine products
(including frozen and in various modes of packaging)
5. Fresh pork, beef and poultry meat
6. All kinds of fresh eggs (excluding quail eggs)
7. Potable water in bottles and containers
8. Fresh and processed milk (excluding milk labelled as food
supplement)
9. Fresh vegetables including root crops
10. Fresh fruits
11. Locally manufactured instant noodles
12. Coffee and coffee creamer
13. All kinds of sugar (excluding sweetener)
14. All kinds of cooking oil
15. Salt
16. Powdered liquid, bar laundry and detergent soap
17. Firewood
18. Charcoal
19. All kinds of candles
20. Household liquefied petroleum gas, not more than 11kgs,
LPG content once very five (5) months bought for LPG
dealers
21. Kerosene, not more than 2 liters per month
Prime commodities are goods not considered as basic
necessities but are essential to consumers. Prime commodities shall
include flour, dried, processed or canned pork, beef and poultry
meat; dairy products not falling under basic necessities; onions,
garlic, vinegar, patis, soy sauce, toilet soap, fertilizer, pesticides and
herbicides; poultry, livestock and fishery feeds and veterinary
products; paper, school supplies, nipa shingles, sawali, cement,
clinker, GI sheets, hollow blocks, plywood, plyboard, construction
nails, batteries, electrical supplies, light bulbs and steel wires.
Prime commodities shall include:
1. Flour
2. Dried, processed and canned pork, beef and poultry meat
3. Dairy products not falling under the definition of basic
necessities
4. Onions and garlic
5. Vinegar, patis and soy sauce
6. Toilet/ bath soap
7. Fertilizer
8. Pesticides
9. Herbicides
10. Poultry feeds, livestock feeds and fishery feeds
11. Veterinary products
12. Paper, school supplies
13. Nipa Shingle
14. Sawali
15. Cement, clinker, GI sheets
16. Hollowblocks
17. Plywood
18. Plyboard
19. Construction nails
20. Batteries (excluding cellphone and automotive batteries)
21. Electrical supplies and light bulbs
22. Steel wires
Page 12 of 20
P. ADMINISTRATIVE PROVISIONS
1. INVOICING REQUIREMENTS
v A VAT registered person shall issue:
a) A VAT invoice for every sale, barter or
exchange of goods or properties; and
b) A VAT official receipt for every lease of
goods or properties and for every sale,
barter or exchange of services.
v Single invoice/ receipt involving VAT and NonVAT transactions
A Vat registered taxpayer may issue a single
invoice/ receipt involving VAT and non-VAT
transactions provided that the invoice or
receipt shall clearly indicate the break-down of
the sales price between its taxable, exempt
and zero-rated components and the calculation
of the Value-Added Tax on each portion of the
sale shall be shown on the invoice or receipt.
v Separate invoices/ receipts involving VAT and
Non-VAT transactions
A VAT registered person may issue separate
invoices/ receipts for the taxable, exempt, and
zero-rated component of its sales provided
that if the sales is exempt from value-added
tax, the term "VAT-EXEMPT SALE" shall be
written or printed prominently on the invoice
or receipt and if the sale is subject to zero
percent (0%) VAT, the term "ZERO-RATED
SALE" shall be written or printed prominently
on the invoice or receipt.
v SALE TO SENIOR CITIZENS. The amount of
sales that must be reported for tax purposes is
the undiscounted selling price and not the
amount of sales net of the discount. The gross
selling price and the sales discount must be
separately indicated in the official receipt or
sales invoice issued by the establishment for
the sale of goods or services to the Senior
Citizen. With regard to the VAT exemption, the
machine tape must properly segregate the
VAT exempt sales from the taxable sales
(Sections 7 and 10 of RR No. 7-2010).
The business establishment giving sales
discounts to qualified Senior Citizens is
required to keep a separate and accurate
record of sales, which shall include the name
of the Senior Citizen-purchaser, OSCA ID,
gross sales/receipts, sales discounts granted,
dates of transactions and invoice/OR number
for every sale transaction to Senior Citizens.
The invoicing requirements in Section 4.113-1
of Revenue Regulations No. 16-2005 must also
be complied with (Sections 7 and 10 of RR No.
7-2010).
v CONSEQUENCES of issuing an erroneous
invoice or official receipt
a) If a person who is not a VAT registered
person issues an invoice or receipt
showing his TIN followed by the word VAT,
the non-VAT person shall be liable to:
i. The percentage taxes applicable to his
transactions.
ii. The VAT due on the transactions without
the benefit of any tax credit; and
iii. A 50% surcharge.
TAX.2905
b) If a VAT registered person issues a VAT
invoice or official receipt for a VAT-exempt
transaction but fails to display prominently
on the invoice or receipt the term “VAT
EXEMPT SALE”, the issuer shall be liable to
VAT.
2.
RETURN & PAYMENT OF VAT (MANUAL FILING)
a) Monthly VAT Returns (First 2 months of the
Quarter) – on or before the 20th day following
the end of the month.
b) Withholding VAT Return – on or before the
10th day following the end of the month.
NOTE: In both cases, the VAT shall, if other
requisite information required is shown on the
invoice or receipt, be recognized as an input
tax credit to the purchaser.
c)
Quarterly VAT (Last month of the Quarter) –
on or before the 25th day following the end of
the quarter.
MULTIPLE CHOICE
1.
Statement 1: For a person to be subjected to VAT, it
is necessary that he is regularly engaged in the
conduct or pursuit of an economic activity.
Statement 2: A non-resident foreign person
performing isolated service in the Philippines shall be
liable to VAT.
A.
B.
C.
D.
Statement 1
Statement 2
2.
3.
4.
True
True
True
False
False
True
False
False
Statement 1: Nonstock and nonprofit private
organizations which sell exclusively to their members
in the regular conduct or pursuit of commercial or
economic activity are exempt from value-added tax.
Statement 2: Government entities engaged in
commercial or economic activity are generally exempt
from value-added tax
a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second state statement is correct.
In 2019, Mr. Uro’s gross receipts from his practice of
profession is P2,600,000 while his wife has gross
sales of P2,200,000 derived from her trading
business. Assuming they are not vat registered, will
they be subject to vat?
a. Yes,
because
their
aggregate
gross
receipts/sales exceeded the vat threshold of
P3,000,000.
b. No, because for purposes of vat threshold,
husband and wife shall be considered as
separate taxpayers.
c. Yes, because their gross receipts/sales are not
specifically exempt from vat as provided in the
Tax Code.
d. None of the above
In 2019, the following gross receipts/sales were
recorded by Apol B:
Gross receipts from practice of P1,850,000
profession
Gross receipts from transport of
1,450,000
goods and cargoes
Gross sales from trading activities
675,000
Assuming Apol B is non-vat registered, will he be
subject to vat?
a. No, because his gross receipts/sales in each
business do not exceed the vat threshold of
P3,000,000.
b. Yes, because if a professional, aside from the
practice of his profession, also derives
revenue from other lines of business which
are otherwise subject to VAT, the same shall
be combined for purposes of determining
whether the threshold has been exceeded.
c. No, because he is not vat registered
d. None of the above
Page 13 of 20
5.
If a radio and/or television broadcasting company
who is not mandatorily required to register under the
VAT system chose to be a VAT taxpayer. Its choice
is:
a. Revocable after 2 years
b. Revocable after 3 years
c. Revocable after 5 years
d. Irrevocable
Use the following data for the next two (2) questions:
In 2019, Pedro signified his intention to be taxed at 8%
income tax rate on gross sales in his 1st quarter income
tax return.
His total gross sales during the year
exceeded the vat threshold of P3M.
The following
quarterly data were provided by Pedro:
Sales
Cost
of
sales
Gross
Income
Operatin
g
expenses
Net
taxable
income
Q1
P500,000
(300,000
)
200,000
Q2
P500,000
(300,000
)
200,000
Q3
P2,000,000
(1,200,000
)
800,000
Q4/Annual
P3,500,000
(1,200,000
)
2,300,000
(120,000
)
(120,000
)
(480,000)
(720,000)
P80,000
P80,000
P320,000
P1,580,000
6.
How much is Pedro’s total business tax due for the
year?
a. P90,000
c. P510,000
b. P195,000
d. nil
7.
Assuming the 3M threshold was breached on the
month of October, Pedro shall register under the vat
system not later than:
a. September 30, 2019
b. October 31, 2019
c. November 30, 2019
d. December 31, 2019
8.
Which of the following shall be exempt from vat?
a. Services of banks.
b. Services of money changers and pawnshops.
c. Services of credit cooperatives
d. All of the above
9.
Which of the following transactions is exempt from
value-added-tax?
a. Medical services such as dental and veterinary
services rendered by professionals.
b. Legal services.
c. Services arising from employee-employer
relationship.
d. Services rendered by domestic air transport
companies.
10. Which of the following sale or importation of goods
shall not be exempt from VAT?
TAX.2905
a.
b.
c.
d.
Fertilizers
Seeds, seedlings and fingerlings
Fish, prawn, livestock and poultry feeds, including
ingredients, whether locally produced or
imported, used in the manufacture of finished
feeds
Specialty feeds.
11. Which of the following transactions is exempt from
value added tax.
a. Sale by an art gallery of literary works, musical
composition, work of art and similar creations, or
devices performed for the production of such
works.
b. Medical,
dental
hospital
and
veterinary
professional services.
c. Sale of cotton and cotton seeds in their original
state.
d. Sale of books and any newspaper, magazine,
review or bulletin, which appears at regular
intervals with, fixed prices for subscription and
sale which is not devoted principally to the
publication of paid advertisements.
12. Statement 1: Sale by agricultural cooperatives to
non-members can only be exempted from VAT if the
producer of the agricultural products sold is the
cooperative itself. If the cooperative is not the
producer (e.g. trader), then only those sales to its
members shall be exempted from VAT.
Statement 2: Sale or importation of agricultural food
products in their original state is exempt from VAT
irrespective of the seller and buyer thereof.
a. true, true
c. false, false
b. true, false
d. false, true
13. Determine the business taxes in 2019 of the
following:
I.Lease of residential units with a monthly rental per
unit not exceeding P15,000 (regardless aggregate
annual gross rentals).
II.Lease of residential units with a monthly rental per
unit exceeding P15,000 but the aggregate of such
rentals during the year do not exceed
P3,000,000.
III.Lease of commercial units regardless of monthly
rental per unit.
I
II
III
A
None
Vat
Vat
B
None
OPT
OPT
C
None
OPT
Vat
D
Vat
Vat
Vat
14. In cases where a lessor in 2018 taxable year has
several residential units for lease, some are leased
out for a monthly rental per unit not exceeding
P15,000 while others are leased out for more than
P15,000 per unit, his tax liability will be:
a. The gross receipts from rentals not exceeding
P15,000 per month per unit shall be exempt from
vat regardless of the aggregate annual gross
receipts.
b. The gross receipts from rentals exceeding
P15,000 per month per unit shall be subject to
vat if the annual gross receipts from said units
including the gross receipts from units leased out
for not more than P15,000 exceed P3,000,000.
c. Both statements are correct.
d. Both statements are incorrect
15. In 2020, a real estate dealer sold two (2) adjacent
residential lots in the city for a price of P1,000,000
each, or a total price of P2,000,000, to a vendee who
intends to erect his residential house thereon.
The sale shall be classified as a:
Page 14 of 20
a.
b.
c.
d.
12% VAT transactions
0% VAT transactions
VAT exempt transactions
None of the foregoing
16. A subdivision developer sold five (5) residential house
and lots, each to different vendees, for P2,400,000
per lot, or a total sales of P12,000,000 during 2020
taxable year. These sales shall be:
a. Subject to 12% VAT transactions
b. Classified as zero-rated transactions
c. Under VAT exempt transactions
d. None of the foregoing
17. Camella realty corporation sold the following real
properties during the 2019 taxable year:
2 units of residential house and lot
P6,000,000
at P3,000,000 each
4 residential lots at P2,000,000 each
8,000,000
1 commercial lot at P3,000,000
3,000,000
How much is the total amount of transactions subject
to VAT?
a. P6,000,000
c. P11,000,000
b. P8,000,000
d. P17,000,000
18. Which of the following transactions of a VATregistered seller is not subject to VAT?
a. Remaining inventory upon retirement from
business
b. Sale of company’s used car to its officers
c. Sale of goods or services to the national
government
d. Sale of residential lot amounting to P1,000,000
19. The value added tax due on the sale of taxable
goods, property and services by any person whether
or not he has taken the necessary steps to be
registered.
a. input tax
c. excise tax
b. output tax
d. sales tax
20. Gross selling price includes all of the following,
except:
a. Total amount which the purchaser pays to the
seller.
b. Total amount which the purchaser is obligated to
pay to the seller.
c. Excise tax.
d. Value-added tax.
21. Which of the following is not deductible from Gross
Selling Price for vat purposes?
a. Discounts determined and granted at the time of
sale, which are expressly indicated in the invoice,
the amount thereof forming part of the gross
sales duly recorded in the books of accounts.
b. Discount determined and granted after the
agreed sales quota is met by the buyer.
c. Sales discount indicated in the invoice at the time
of sale, the grant of which is not dependent upon
the happening of a future event, deductible within
the same month or quarter given.
d. Sales returns and allowances for which a proper
credit or refund was made during the month or
quarter to the buyer for sales previously recorded
as taxable sales.
22. On January 5, 2018, Towell Co., VAT-registered, sold
on account goods for P112,000, gross of VAT. The
term was: 2/10, n/30. Payment was made on
January 10, 2018. The total amount due is:
a. P110,000
c. P112,000
b. P107,800
d. P109,760
TAX.2905
23. Mr. Andres, VAT-registered real estate dealer,
transferred a parcel of land held for sale to his son as
gift on account of his graduation. For VAT purposes,
the transfer is:
a. Not subject to VAT because it is a gift
b. Subject to VAT because it is a deemed sale
transaction
c. Not subject to VAT because it is subject to gift tax
d. Subject to VAT because it is considered an actual
sale
24. One of the following is not a transaction deemed
sale:
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.
b. Distribution or transfer to shareholders or
investors of goods or properties as share in the
profits of a VAT-registered person or creditors in
payment of debt.
c. Retirement from or cessation from business with
respect to all goods on hand as of the date of
such retirement or cessation.
d. Consignment of goods if actual sale is made
within 60 days following the date such goods
were consigned.
25. Genson Distribution Inc., a VAT taxpayer, had the
following data in a month:
Cash sales
P200,000
Open account sales
500,000
Consignment:
0 to 30 days old (on which
there were remittances from
consignees of P200,000)
600,000
31 to 60 days old
700,000
61 days old and above
900,000
How much is the output tax?
a. P348,000
c. P264,000
b. P216,000
d. P108,000
26. The following are the data of Davao Appliances
Marketing Co. for the last quarter of 2018:
Sales up to December 15, total
invoice value
P380,800
Purchases up to December 15, net
of input taxes
150,000
Additional information:
On December 16, 2018, the Company retired from its
business and the inventory valued at P190,000
remained unsold. There is a deferred input tax from
the third quarter of P3,500.
How much is the total value-added taxes payable by
Davao Appliances Marketing Co.?
a. P42,100
c. P22,800
b. P21,500
d. P19,300
27. Evelyn, a trader of appliances, made the following
sales of goods during the month of March 2018,
exclusive of VAT:
Cash sales
P 200, 000
Open account sales
100, 000
Installment sales
100, 000
Note: Receipt from installment
sales is P20,000
Consignment made: (net of VAT)
January 15, 2018
100, 000
February 15, 2018
200, 000
March 15, 2018
300, 000
Output tax is:
a. P60,000
c. P72,000
Page 15 of 20
b. P40,800
d. P64,800
28. Construction by Mikee-Mega Builders (MMB) of
concrete barrier for the Asian Development Bank
(ADB) in Ortigas Center to prevent car bombs from
ramming the ADB gates along ADB avenue in
Mandaluyong City is subject to what business tax?
a. 12% vat
c. exempt from vat
b. 0%vat
d. 3% OPT
29. Any input tax attributable to zero-rated sales by a
VAT-registered person may at his option be:
a. Deducted from output tax
b. Refunded
c. Converted into tax credit certificate which may be
used in payment of internal revenue taxes.
d. All of the above
30. Tax credit for input taxes shall be allowed if:
a. Both the seller and the purchaser are VATregistered
b. Either one of the seller or the purchaser is VATregistered.
c. Neither one of the seller or the purchaser is VATregistered as long as VAT invoice is issued.
d. The seller is VAT-registered regardless of whether
the purchaser is VAT-registered or not.
31. Which statement is not correct?
a. The excess input taxes of a taxable month arising
from domestic sales may be carried over to the
succeeding month.
b. The excess input taxes of a taxable quarter
arising from domestic sales may be carried over
to the succeeding quarter.
c. The excess input taxes of a taxable period arising
from domestic sales is refundable.
d. The excess input taxes of a payable period arising
from exports sales may be refunded.
32. Magnifeco Corp. is a VAT-registered dealer of
appliances. The following data are for the last quarter
of 2019:
Sales (inclusive of vat)
P6,920,000
Purchases, net of input taxes
5,500,000
Sales return (incl. of vat)
200,000
Purchase return, net of VAT
300,000
Deferred input taxes (carried over from the
third quarter of 2019)
12,000
The value added tax payable for the last quarter of
2019 by Magnifeco Corp. is:
a. P84,000
c. P108,000
b. P96,000
d. P130,500
33. The vat on importation of goods which are
subsequently used or sold in the course of trade or
business by a vat registered importer shall be treated
as
I.
Tax credit
II.
Inventoriable cost
III.
Expense
a. I only
c. III only
b. II only
d. none of the above
34. Which of the following statements is incorrect?
a. VAT on importation is paid to the Bureau of
Customs before the imported goods are released
from its custody.
b. When a person who enjoys tax-exemption on his
importation subsequently sells in the Philippines
such imported articles to non-exempt persons,
the purchaser-non-exempt person shall pay the
VAT on such importation.
TAX.2905
c.
d.
Expenses incurred after the goods are released
from Customs custody are disregarded in
computing VAT on importation.
Imported goods which are subject to excise tax
are no longer subject to value-added tax.
35. Bryan, vat registered person, imported machines
from Australia as follows:
Machine Acquisition Cost
Purpose
A
P100,000
Personal use
B
200,000
Business use
C
300,000
For sale
The importations were subjected to 50% excise
tax based on purchase price. Machine C was sold
for P1,000,000 exclusive of vat. How much is the
vat paid to the BOC?
a. P108,000
c. P54,000
b. P90,000
d. P36,000
36. Using the above data, the amount of vat to be
remitted to the BIR should be
a. P12,000
c. P106,000
b. P30,000
d. P84,000
37. World Power Corp. imported an article from Japan.
The invoice value of the imported articles was $7,000
($1- P50). The following were incurred in connection
with the importation:
Insurance
P 15,000
Freight from Japan
10,000
Postage
5,000
Wharfage
7,000
Arrastre charges
8,000
Brokerage fee
25,000
Facilitation fee
3,000
The imported article was imposed P50,000 customs
duty and P30,000 excise tax.
The Company spent P5,000 for trucking from the
customs warehouse to its warehouse in Quezon City.
The carrier is not subject to VAT.
The VAT on importation is:
a. P60,000
c. P60,600
b. P42,000
d. P80,000
38. Based on the preceding number, if the imported
article was sold for P800,000, VAT exclusive, the VAT
payable is:
a. P24,000
c. P36,000
b. P12,000
d. P11,040
39. Sofia had the following data for the month of June
(all amounts are vat exclusive):
CASE 1
CASE 2
Sales
P1,900,000
P1,800,000
Purchases of goods
1,260,000
1,600,000
for sale
Purchases of
1,440,000
900,000
machines
Machine life
6 years
3 years
The amounts of vat payable(excess tax) shall be:
(a)
(b)
(c)
(d)
CASE 1
P54,000
P73,920
P73,920
None
CASE 2
(84,000)
(84,000)
20,000
None
40. Maymay,
VAT-registered,
made
the
following
purchases during the month of January, 2018:
Goods for sale, inclusive of VAT
P 246,400
Supplies, exclusive of VAT
20, 000
Packaging materials, total invoice
amount
56, 000
Home appliances for residence,
Page 16 of 20
gross of VAT
Office machines (5 pcs.), 8 years
useful life, net of VAT
Repair
official
a.
b.
of store amounted
receipt. Creditable
P38,800
P34,800
17,920
2,000,000
to P20,000, no supporting
Input taxes are:
c. P37,440
d. P35,520
41. All of the following are allowed presumptive input tax,
except for one.
a. Processor of sardines, mackerel and milk.
b. Manufacturer of refined sugar and cooking oil.
c. Producers/manufacturers of packed noodles.
d. Supplier of books and other school supplies.
42. Mantika Corp., a VAT-registered Corp., is a producer
of cooking oil from coconut and corn. It had the
following data for the month of January 2019:
Sales, gross of VAT
Corn & Coconut, 12-31-18
Purchases of Corn & Coconut
Corn & Coconut, 1-31-19
Purchases from VAT suppliers, VAT
included:
Packaging Materials
Supplies
P784,000
50,000
330,000
20,000
56,000
16,800
The value-added tax payable for the month:
a. P56,060
c. P60,650
b. P54,900
d. P63,000
43. Taxpayers who became VAT registered persons upon
exceeding the minimum turn-over of P3,000,000 in
any 12-month period, or who voluntarily register
even if their turnover does not exceed P3,000,000
shall be entitled to a transitional input tax on the
inventory on hand as of the effectivity of their vat
registration on the following, except;
a. Supplies for use in the course of taxpayer’s trade
or business
b. Goods which have been manufactured by the
taxpayer
c. Goods in process for sale
d. Capital goods being used in the operation of the
business
44. Transitional input tax can be claimed as deduction
from output tax. Which of the following statements is
correct?
a. It can be claimed by a vat registrable person.
b. It can be claimed by a taxpayer who registered
as vat taxpayer from the inception of business.
c. It can be claimed by a taxpayer who is initially
subject to vat and subsequently cancelled his vat
registration.
d. It can be claimed by a taxpayer who is initially
paying percentage tax and subsequently
registered as vat taxpayer.
45. Which of the following shall be included in the
beginning inventory for purposes of determining the
transitional input vat?
a. Goods purchased for resale in the ordinary course
of trade or business.
b. Materials purchased for further processing which
have not yet undergone processing
c. Goods which have been manufactured by the
taxpayer
d. All of the above
46. A taxpayer registered under the VAT system on
January 1, 2019. His records during the month show:
TAX.2905
Value of inventory as of December 31,
2018 purchased from VAT-registered
persons
VAT paid on inventory as of December
31, 2018
Value of inventory as of December 31,
2018 purchased, from non-VAT persons
Sales, net of VAT
Sales, gross of VAT
Purchases, net of VAT
Purchases of VAT exempt goods
VAT payable is:
a. P23,080
b. P25,320
d.
P112,000
12,000
518,000
240,000
45,920
70,000
50,000
c. P12,720
d. P12,320
47. Dong Inc., a manufacturer, had the following data for
the first month of 2018: (First year as a VAT
Taxpayer)
Sales:
Exports
P2,000,000
Domestics (Without VAT)
1,000,000
Purchases, excluding VAT:
Raw Materials
300,000
Services
100,000
Machinery
(estimated useful life 2 years)
400,000
On January 1, 2018, the company had inventories
and taxes paid thereon as follows:
Cost
VAT Paid
Raw Materials
P120,000
P2,000
Supplies
40,000
4,000
The VAT payable by Dong Inc. is:
a. P72,000
c. P11,000
b. P57,000
d. P66,000
48. What institution is required to deduct and withhold a
final VAT of 5% on the purchase of goods or services
subject to VAT?
a. National government or any political subdivision
thereof
b. Government-owned or controlled corporations
c. Both (a) and (b)
d. Neither (a) nor (b)
value added tax
value added tax
of
month
the
of
month
the
of
month
the
of
month
the
50. A VAT-registered supplier sold goods amounting to
P500,000 to a government-controlled corporation
during a particular quarter. Which of the following
statements is incorrect in relation to the sale in
relation to the sale of goods?
a. The sale is subject to final withholding VAT.
b. The
government-controlled
corporation
will
withhold P25,000 withholding VAT.
c. The government-controlled corporation shall
remit the withholding of VAT to the BIR within 10
days following the end of the month the
withholding was made.
Page 17 of 20
Use the following data for the next two questions:
A VAT-registered trader has the following transactions:
Sales of good to private entities,
P2,500,000
net of VAT
Purchases of goods sold to
896,000
private entities, gross of 12%
VAT
Sales to a government owned
1,000,000
corporation (GOCC), net of VAT
Purchases of goods sold to
700,000
GOCC, net of 12% VAT
51. How much is the output tax?
a. P300,000
c. P420,000
b. P120,000
d. nil
52. How much is the standard input tax?
a. P20,000
c. P50,000
b. P70,000
d. nil
53. How much is the creditable input tax?
a. P166,000
c. P70,000
b. P96,000
d. P180,000
54. How much is the input tax closed to (expense)
income?
a. P14,000
c. (P14,000)
b. P34,000
d. (P34,000)
During the month, raw materials were purchased
from another enterprise with a total invoice value of
P61,600, not included above.
49. The withholding agent of creditable
is required to remit the amount of
withheld within
a. 25 days following the end
withholding was made
b. 20 days following the end
withholding was made
c. 15 days following the end
withholding was made
d. 10 days following the end
withholding was made
The VAT-registered supplier may refuse the
withholding of VAT as long as it is willing to pay
the full 12% VAT.
55. How much is the VAT payable to the BIR?
a. P404,000
c. P204,000
b. P390,000
d. nil
56. A
VAT-registered
trader
has
the
following
transactions for the month of July 2019:
Sale of goods to private entities,
P2,500,000
net of VAT
Purchases of goods sold to
896,000
private entities, gross of 12%
VAT
Sales to a government owned
1,500,000
corporation (GOCC), net of VAT
Purchases of goods sold to
700,000
GOCC, net of 12% VAT
Purchases of Machineries, gross
11,200,000
of VAT, useful life is 6 years
How much is the VAT payable to the BIR?
a. P280,000
c. P191,500
b. P224,000
d. P300,000
57. Based on the preceding number, how much is the
input tax closed to (expense) income?
a. (P13,500)
c. P13,500
b. P21,000
d. (P21,000)
Use the following data for the next two questions:
Alpha Corporation (vat registered) has the following data
for the month:
Sales – private entities
P2,000,000
Sales – vat exempt goods
1,000,000
Sales – government
1,000,000
The following input taxes were passed-on by vat suppliers
to Alpha Corporation during the month:
Input vat on taxable goods
P80,000
Input vat on sale of exempt goods
20,000
Input vat on sale to the government
40,000
Input tax on depreciable capital
160,000
goods not directly attributable to any
specific activity (monthly amortization
TAX.2905
for 60 months)
65. Assuming that the scheduled payment on June 2,
2018 is P2,000,000, how much is the output tax to
be recognized for the June 2, 2020 payment?
a. P0
c. P249,600
b. P24,000
d. P624,000
58. The vat payable for the month is
a. P40,000
c. P160,000
b. P80,000
d. nil
59. The amount of input vat not available for tax credit
but may be recognized as cost or expense is:
a. P60,000
c. P80,000
b. P70,000
d. P140,000
60. Leomar, a VAT-registered person has the following
data:
Export sales, total invoice amount
Domestic sales, total invoice amount
Purchases used to manufacture Goods
for export and domestic sales:
Raw Materials, VAT inclusive
Supplies, VAT inclusive
Equipment, VAT exclusive
P3,000,000
6,720,000
616,000
448,000
300,000
The amount of input tax which can be refunded or
converted into tax credit certificates at the option of
Leomar is:
a. P120,000
c. P39,600
b. P118,800
d. P50,000
61. Based on the preceding number, if the refundable
input taxes were not refunded but used as tax credit,
the VAT due is:
a. P576,000
c. P666,888
b. P697,888
d. P570,000
62. But assuming further that the taxpayer opted to
claim them as refund, the VAT due is:
a. P576,000
c. P746,888
b. P697,888
d. P620,000
63. Kaktus Realty Inc. developed a condominium in
Manila. During the month of January 2019, it had the
following data (VAT included,if applicable):
Cash sale of a 3 bedroom unit
Sale of parking lot
Installment sale of 2 bedroom
unit (initial payments exceed
25% of the selling price)
Selling Price
P5,040,000
560,000
3,920,000
The 3 bedroom unit sold for cash had a zonal value of
P5,000,000 and the 2 bedroom unit had a fair market
value per Tax Declaration of P3,000,000.
How much is the output tax for the month?
a. P920,000
c. P1,020,000
b. P900,000
d. P1,080,000
64. Bahay Kubo Inc. is a real estate dealer. Details of its
sales during the year showed the following:
Date of sale
Consideration in the deed of sale
Fair market value in the assessment
rolls
Zonal Value
Schedule of payments:
June 2, 2018
June 2, 2019
June 2, 2020
June 2, 2018
P5,000,000
4,800,000
5,200,000
1,000,000
2,000,000
2,000,000
How much is the output tax to be recognized for the
June 2, 2020 payment?
a. P0
c. P249,600
b. P24,000
d. P624,000
Page 18 of 20
Use the following data for the next two (2) questions:
JJ is a real estate dealer. During the month of October
2019, he sold three (3) commercial lots under the
following terms:
Lot 1
Lot 2
Lot 3
Selling Price
P250,000
P200,000
P300,000
Cost
150,000
130,000
175,000
Gain/Loss
100,000
70,000
125,000
Terms:
Down, Oct. 5
25,000
50,000
40,000
Due:
12/05/ 2019
25,000
20,000
20,000
Year 2020
200,000
130,000
240,000
Zonal Value
350,000
260,000
250,000
66. How much is the Output tax for the month of
October?
a. P26,500
c. P31,800
b. P34,800
d. P40,200
67. The Output tax for December is
c. P5,400
d. P4,500
c. P6,600
d. none
68. Data for a trader with one line of business subject to
value added tax and another line of business not
subject to value added tax (amounts presented are
gross of vat if applicable):
Sales, vat business
P896,000
Sales, non-vat business
200,000
Purchases of goods, vat business
224,000
Purchases of goods, nonvat
33,600
business
Purchase of depreciable asset, for
112,000
use in vat and non vat business
Purchases of supplies, for vat and
2,240
non vat business
Rental of premises, for vat and non
22,400
vat business, from non vat lessor
The value added tax payable is
a. P59,808
c. P82,608
b. P62,208
d. P86,208
69. Tore Inc., a building contractor, showed to you the
following data for the month of August 2015:
Cash received, gross of VAT
2,240,000
Receivables, net of VAT
3,000,000
Advances on other contracts still
1,000,000
unearned (w/o VAT)
Unpaid Purchases:
For materials, VAT excluded
For supplies, VAT excluded
For services of sub-contractors
(VAT included)
Payments for purchases made in
July:
Materials, gross of VAT
Services of subcontractors, net of
VAT
500,000
100,000
1,848,000
369,600
495,000
How much is the value added tax payable?
a. P360,000
c. P330,000
b. P228,600
d. P90,000
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70. Cebu Airlines is a corporation organized in the
Philippines. It has the following data for the taxable
year 2018:
Passengers Fare (Net of VAT):
Flights
from
Philippines
to
Hongkong
Flights
from
Hongkong
to
Philippines
Domestic Flights (gross of 2%
withholding tax)
Fares from cargoes & mails (Net
of VAT):
Flights
from
Philippines
to
Hongkong
Flights
from
Hongkong
to
Philippines
Domestic Flights (gross of 2%
withholding tax)
Other Income:
Interest
income
from
bank
deposits
Rent income
How much is the Output Tax?
a. P456,000
b. P516,000
P8,000,000
8,000,000
1,000,000
1,000,000
The following input taxes were passed-on by vat suppliers
to Alpha Corporation during the month:
Input vat on goods sold to private
P120,000
entities and individuals
Input vat on sale of exempt goods
20,000
Input vat on sale to the government
100,000
3,000,000
76. The vat payable for the month is
a. P216,000
c. P96,000
b. P108,000
d. P36,000
P1,000,000
1,500,000
77. The amount of input vat not available for tax credit
but may be recognized as cost or expense is:
a. P20,000
c. P62,000
b. P50,000
d. nil
800,000
800,000
500,000
c. P420,000
d. P0
71. If a dealer in securities sold shares in the local stock
exchange, what business tax will apply to such
transaction?
a. VAT based on Gross Selling Price
b. VAT based on gain
c. Capital Gains Tax
d. Stock Transaction Tax of 6/10 of 1%
72. Lola Lita, a senior citizen, bought a medicine with a
selling price of P9,520 inclusive of VAT. How much is
the net amount to be paid by Lola?
a. P8,500
c. P6,916
b. P7,616
d. P6,800
73. Lolo Sot, a senior citizen went to Jollibee to treat his
4 grandchildren on account of his retirement. They
consumed food and beverages with gross amount of
P1,120 inclusive of VAT. How much is amount to be
paid by lolo Sot?
a. P896
c. P1,056
b. P920
d. P1,100
74. Lola Trining brought her granddaughter to Jollibee for
a treat. Her granddaughter requested that they both
order kiddie meals so that the latter will have two (2)
new toys since each meal have a free one. The price
of each meal is P120, net of VAT. How much is the
amount due from Lola Trining?
a. P268.8
c. P240
b. P230.4
d. P192
75. Gabriana Clinic, a VAT-registered entity, performed a
prosthetic surgery on the legs of Loyd, a person with
disability. The total cost of medical operation
inclusive of vat was P560,000 . Being a disabled
person, Loyd received 20% discount from Gabriana.
How much is the total amount to be paid by Loyd?
a. P400,000
c. P500,000
b. P448,000
d. P560,000
Use the following data for the next two questions:
Alpha Corporation (vat registered) has the following data
for the month:
Sales – private entities and
P2,000,000
individuals
(10%
to
senior
citizens)
Page 19 of 20
Sales – vat exempt goods
Sales – government
Items 88 to 91
The Wash Corporation, a VAT-registered company, is
engaged in the laundry business. During the second
quarter of 2018, the following information were made
available:
Net revenues
2M
Receivables from customers, April 1, 2018
448,000
Receivables from customers, June 30, 2018
672,000
Creditable VAT withheld
10,000
VAT purchases, other than capital goods
600,000
VAT purchases, capital goods (all in April 2018)
2.4M
Receivable balances are all income related and are
inclusive of VAT. Revenues and purchases are VAT
exclusive. Capital goods are estimated to have a useful
life of 10 years.
78. Compute item 19B of BIR Form No. 2550Q.
a. P216,000
c. P213,120
b. P264,000
d. P240,000
Net revenues
Add: Receivables, beg. (net of vat)
Less: Receivables, end. (net of vat)
Gross receipts or collections for the quarter
x vat rate
Output vat
P2,000,000
400,000
(600,000)
P1,800,000
12%
P216,000
79. Compute item 22 of BIR Form No. 2550Q
a. P86,400
c. P360,000
b. P72,000
d. P370,000
Vat purchases, other than capital goods
(P600,000 x 12%)
Vat purchases, capital goods, (all in April)
P2,400,000 x 12%
Total available input vat
P72,000
288,800
P360,000
80. Compute the deferred input tax as of March 31,
2018:
a. P280,000
c. P283,200
b. P273,600
d. None
Input Vat NOT directly attributable to sale to the
Government:
Total Input vat on purchases of capital goods
=P2,400,000 x 12%
P288,000
CREDITABLE Input vat on purchases of capital
goods for the 2nd Quarter
=P2,400,000 x 12% / 60 mos. x 3 mos.
Deferred input vat
(P14,400)
P273,600
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81. Compute item 23B of BIR Form No. 2550Q
a. P26,000 closed to expense
b. P22,000 closed to expense
c. P4,400 closed to income
d. P5,360 closed to income
Input Vat NOT directly attributable to sale to the
Government:
Input vat on purchases other than capital goods
=P600,000 x 12% x 200/1800
Vat purchases of capital goods
= P2,400,000 x 12% / 60 mos.
x 3 mos. x 200/1800
TOTAL ALLOCATED INPUT VAT
VS.
STANDARD Input Vat
(P200,000 x 7%)
Input Vat closed to income
Page 20 of 20
P8,000
1,600
P9,600
(14,000)
(P4,400)
TAX.2905