VAT: CONCEPT
AND NATURE
OF VAT
I N P U T TA X C A R RY OV E R
VAT A N D D I S C O U N T F O R S E N I O R
CITIZEN AND PWD
Presentation by:
NIKKI JOY M. FRANCISQUETE
Evaluate VAT including the
application of rules on
excess input tax carryover.
OBJECTIVES :
Understand the concept
and nature of VAT and
discounts for senior
citizens and persons with
disability (PWD).
Formula:
Output Tax
Less: Allowable Input Tax
Net VAT Payable
Less: Tax credits/Payments
VAT Payable (Excess)
 Tax credits/Payments:
1. VAT paid in previous month
2. VAT paid in return previously filed, in the case of amended return
3. Advance payment made to the BIR
4. Final withholding VAT on sales to the government
5. Advance VAT on certain goods
VAT
PAYABLE
TAX CREDIT/PAYMENTS
Advance VAT on certain goods
The owner’s or sellers of the following goods are required to pay advanced VAT before their
withdrawal at the point of production:
 Refined Sugar – Total production of 50 kg-bag of refined sugar x 1,400
 Flour
 Importation of wheat by a flour miller
(Invoice price + estimated customs duties and other charger prior to the release of wheat from
customs, except advance VAT) x 105% x 75%
 Purchase of wheat by flour millers from traders
(Invoice value + estimated freight) x 105% x 75%
TAX CREDIT/PAYMENTS
Advance VAT on certain goods

Naturally grown and planted timber products
Luzon
Visayas
Mindanao
Philipine mahogany group, Manggasinoro
group, Manggachapul group, Narig group,
Palosapis group, Guijo group
1,400/m³
1,400/m³
1,425/m³
Yakal group
1,500/m³
Apitong group
1,260/m³
1,260/m³
1,260/m³
Softwood species except Igem
715/m³
715/m³
715/m³
Igem
1,275/m³
1,275/m³
1,275/m³
Nato
1000/m³
1000/m³
1000/m³
1,530/m³
TAX CREDIT/PAYMENTS
Advance VAT on certain goods

Naturally grown and planted timber products
Luzon
Visayas
Mindanao
Furniture/Construction hardwood
950/m³
950/m³
950/m³
Premium species, allowed cut
3,000/m³
3,000/m³
3,000/m³
Lesser-used
700/m³
700/m³
700/m³
Pulpwood, chip wood and mathwood
species
95/m³
95/m³
95/m³
TAX CREDIT/PAYMENTS
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 cooperative which is sold to another agricultural
cooperative
VAT PAYABLE
ABC Company had the following data during the quarter:
Private entities
Export/Import
Government
Exempt goods
Sales, net of VAT
1,350,000
300,000
250,000
100,000
Input VAT
60,000
36,000
24,000
2,000
ABC Company had 12,000 input VAT-carry-over from the preceeding quarter. It paid a total of 28,000
VAT in the first two months of the quarter/ It also made voluntary advance payments of 20,000 to the
BIR in anticipation of its quarterly VAT payable
VAT PAYABLE
ABC Company had the following data during the quarter:
Output tax:
Sales to private entity
Export sales
Sales to government
Less: Allowable input tax
Input VAT carry-over
Private entities
Import
Standard input VAT
Net VAT payable
Less: Tax credit/payments
VAT paid in previous months
Advance payments to BIR
Final Withholding VAT
Vat payable
162,000
0
30,000
12,000
60,000
36,000
17,500
28,000
20,000
12,500
192,000
125,500
66,500
66,500
6,000
Schedule of payment of VAT payable:
• 1st month of the quarter – within 20 days from the end of
the month
• 2nd month of the quarter – within 20 days from the end of
the month
• 3rd month of the quarter – within 25 days from the end of
the quarter
• Withholding VAT Return – within 10 days after the end of
the month
Overpayment
• Negative net amount in the VAT return may be treated as
“Input VAT Carry-over” to the succeeding period
• Taxpayer does not need to pay VAT but only required to
file the VAT Return
INPUT
TAX
CARRYOVER
INPUT TAX CARRY-OVER
Treatment of excess input tax:
Type of Input Tax
Treatment
Related to sales subject to 12% VAT
Carry-over
Subject to 0% VAT
Carry-Over
Refund
Convert into tax credit certificate
Capital goods
Refund
Convert into tax credit certificate
In case of cancellation of VAT registration
Convert into tax credit certificate
Refund, in case it has no other tax liability
INPUT TAX CARRY-OVER
• Carry-over means excess input tax can still be used against the output tax only
after the succeeding taxable month until there is no more excess input tax or the
computation will result to VAT payable
• Refund means cash refund by the BIR to the taxpayer. Once, chosen, there will be
no more option to carry-over or convert to tax credit certificate
• Tax credit certificate can be used not just against output tax but also to other
internal revenue taxes.
INPUT TAX CARRY-OVER
Prescription for claim for refund or tax credit
• Two years from the close of the taxable
quarter when the zero-rated sales were
made, not from the date of payment
INPUT TAX CARRY-OVER
Sample Problem:
The following data relates to the regular sales of the VAT taxpayers:
Prior quarter
Current quarter:
1st month of current quarter
2nd month of the current quarter
3rd month of the current quarter
Output VAT
350,000
120,000
150,000
220,000
Input VAT
390,000
100,000
145,000
70,000
INPUT TAX CARRY-OVER
Solution:
Excess from the prior quarter (350,000-390,000)
40,000
1st month of the
quarter
2nd month of the
quarter
3rd month of the
quarter
Output VAT
120,000
150,000
490,000
Less: Allowable input tax
100,000
145,000
315,000
Net VAT payable
20,000
5,000
175,000
Less:Tax credits/payments (40,000)
(20,000)
(40,000)
VAT Payable/(excess)
(15,000)
135,000
(20,000)
Formula in computing tax due:
In case that:
• The bill is for a group of
individuals involving nonsenior citizens and a senior
citizen
• In case of set meal(s) not
limited to a single serving and
is shared with Non-Senior
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 Citizen’s ID cards
(including purchase of whole
cake and pizza).
Total bill inclusive of VAT
Less:VAT
Total bill exclusive of VAT
Less: 20% discount
Total amount due
xxx
xxx
xxx
xxx
xxx
Total bill inclusive of VAT
xxx
Divided by [No. of customer] xxx
Bill per customer
xxx
Multiply by [No. of SC]
xxx
Bill for senior citizen
xxx
Less:VAT
xxx
Total bill exclusive of VAT
xxx
Less: 20% discount
xxx
Total amount due
xxx
VATEXEMPT
AND
DISCOUNT
FOR
SENIOR
CITIZEN
AND PWD
VAT-EXEMPT SALES AND DISCOUNT TO SENIOR CITIZEN
(SEC. 4, RR 7-2010)
The following items sold to a senior citizen are vat-exempt and will entitle the latter to a minimum
discount of 20%:
• Medicine and drug purchases including influenza and pneumococcal vaccines and such other
essential medical supplies, accessories and equipment.
• Professional fees of attending physicians in all private hospitals, medical facilities, outpatient
clinics and home health care services.
• Professional fees of licensed health workers providing home health care services in all private
hospitals, medical facilities, outpatient clinics, and home health care services.
• Medical and dental service, diagnostic and laboratory fees.
• On actual fare for land transportation travel.
• In actual fare for domestic air transport and sea shipping vessels and the like.
• On the utilization of services in hotels and similar lodging establishments, restaurants,
recreation centers.
• On admission fees charged by theaters, cinema houses and concert halls, circuses, carnivals and
other similar places of culture, leisure and amusement.
• On funeral and burial services of senior citizens.
VAT-EXEMPT SALES AND DISCOUNT TO SENIOR CITIZEN
(SEC. 4, RR 7-2010)
Rule for Restaurants:
Discount shall be for the sale of food, drinks, dessert, and other consumable items including
value meals and promotional meals offered for the consumption of general public
• 20% discount and VAT exemption shall apply for the following:
• Dine-in, take-out, drive-thru, and delivery orders (excluding bulk orders)
• Set meals, Group meals, or group walk-in, including the purchase of whole cake and pizza
• “Pasalubong” food items which are single-serving/solo meal for the personal and exclusive
consumption of Senior Citizen.
•
VAT-EXEMPT AND DISCOUNT ON SENIOR CITIZEN
Sample Problem:
Nanay Caridad, a senior citizen went to JAJAZ PABS Restaurant with her 5 grandchildren. The
gross amount of their order is 4,032 inclusive of VAT. How much is the discount and total amount
due with respect to the proportion of senior citizen in the gross amount.
Total bill inclusive of VAT
Divided by [No. of customer]
Bill per customer
Multiply by [No. of SC]
Bill for senior citizen
Less:VAT
Total bill exclusive of VAT
Less: 20% discount
Total amount due
4,032
6
672
1
672
72
600
120
480
VAT-EXEMPT AND DISCOUNT ON SENIOR CITIZEN
Sample Problem:
Nanay Caridad, and Lolo Enting, both senior citizens went to JAJAZ PABS Restaurant with their 5
grandchildren. The gross amount of their order is 4,032 inclusive of VAT. How much is the
discount and total amount due with respect to the proportion of senior citizen in the gross
amount.
Total bill inclusive of VAT
4,032
Divided by [No. of customer]
7
Bill per customer
576
Multiply by [No. of SC]
2
Bill for senior citizens
1,152
Less:VAT
123
Total bill exclusive of VAT
1,029
Less: 20% discount
206
Total amount due
823
 Purchase of basic necessities and prime
commodities are not exempt from VAT.
 For SC, they are given 5% discount on these
commodities.
 Granted considering that the said purchase is for
personal and exclusive consumption of senior
citizen
 Total purchase amount should not exceed 1,300
per 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
GRANT OF 5%
SPECIAL
DISCOUNT
(SECTION 5, RR
7-2010 AS
AMENDED BY
RR 8-2010 AND
RMC 38-2012).
GRANT OF 5% SPECIAL DISCOUNT (SECTION 5, RR 7 -2010
AS AMENDED BY RR 8-2010 AND RMC 38-2012).
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
• While the law provides for VAT exemption of Senior Citizens, it does not include exemption from the payment of Percentage Tax.
• In the purchase of goods and services with promotional discount
• Promotional discount or the 20%/5% discount, whichever is higher.
• Discount that must be given to the Senior Citizen shall in no case be less than 20%/5%.
• 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,)
• Alcoholic beverages:
• Not subject to the 20% discount and VAT exemption if purchased “in bulk”, “in buckets” or “in cases”.
• Entitled to the 20% discount and VAT-exemption if consumed as a single serving drink.
• Beverages purchased in a bar, club or cabaret are exempt from VAT but subject to amusement tax of 18% 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.
• Cigarettes/ cigars are not the food or essential items deemed subject to the 20% discount.
• Toll fees are not the same as “fares”. Hence, it is not subject to the 20% Senior Citizen Discount. RA 10754 “AN A
Person with disability shall be entitled to:
1. Atleast 20% and VAT exemption of the following, for exclusive use,
enjoyment, and availment of:
a)
On the fees and charges relative to the utilization of all services
in hotels and similar lodging establishments; restaurants and
recreation centers
b)
On admission fees charged by theaters, cinema houses, concert
halls, circuses, carnivals and other similar places of culture,
leisure and amusement
c)
On the purchase of medicines in all drugstores
d)
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)
RA 10754 “AN
ACT
EXPANDING
THE BENEFITS
AND
PRIVILEGES OF
PERSONS WITH
DISABILTIY
(PWD)”
RA 10754 “AN ACT EXPANDING THE BENEFITS AND
PRIVILEGES OF PERSONS WITH DISABILTIY (PWD)”
e) 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;
f) On fare for domestic air and sea travel
g) 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
h) 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 origin, but shall exclude
obituary publication and the cost of the memorial lot
RA 10754 “AN ACT EXPANDING THE BENEFITS AND
PRIVILEGES OF PERSONS WITH DISABILTIY (PWD)”
2.
3.
3.
4.
Educational assistance to PWD including support for books, learning materials, and uniform
allowance to the extent 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;
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);
Provision of express lanes for. In the absence thereof, priority shall be given to them.
RA 10754 “AN ACT EXPANDING THE BENEFITS AND
PRIVILEGES OF PERSONS WITH DISABILTIY (PWD)”
“The mentioned privileges are available only to PWD who are Filipino Citizens upon submission of
any of the following as proof of his/ her entitlement thereto:
1. An identification card issued by the city or municipal mayor or the barangay captain of the place
where the PWD resides;
2. The passport of the PWD concerned
3. transportation discount fare identification card (ID) issued by the National Council for the
Welfare of Disabled Persons (NCWDP).
Note:
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.
RA 10754 “AN ACT EXPANDING THE BENEFITS AND
PRIVILEGES OF PERSONS WITH DISABILTIY (PWD)”
The establishments may claim the discounts granted 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.
Tax deduction based on the net cost of the goods
sold or services rendered
The cost of the discount shall be allowed as
deduction from the gross income for the same
taxable year that the discount is granted
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.
TREATMENT
OF THE
DISCOUNT BY
THE TAXPAYER
THANK YOU