Introduction to Consumption Tax
Consumption
- Acquisition or utilization of goods or services by any person
- Subject to consumption tax
- The purpose of acquisition is immaterial
Types of Consumption Tax
1. Value-Added Tax
2. Percentage Tax
3. Excise Tax
Rationale of Consumption Tax
- Savings formation
- Benefit received theory
- Redistribution of wealth
Destination Principle
Consumption tax is imposed only on goods and services
destined for consumption in the Philippines.
Business Tax
- The domestic consumption of goods purchased locally by
resident purchasers is subject to business tax.
- Indirect tax
Consumption Tax on Importation
- Importation is subject to a consumption tax call VAT on
importation
- It must involve the current acquisition of goods or services.