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TITLE IV – VALUE ADDED TAX – TAX CODE PROVISIONS 3.

Sale of raw materials/ packaging to export-oriented enterprise – export sales


dat ay 70% or more
CHAPTER 1 – IMPOSITION OF TAX 4. Those considered export sales under Executive Order No. 226 Omnibus
Sec. 105. Persons liable. Investment Code of 1987 & other special laws
5. Sale of goods, supplies, equipment & fuel to persons engaged in int’l
 Any person in the course of trade or busn, sells, barters, exchanges, leases goods/ shipping/ int’l air transport ops. Provided, dun sila gagamitin
properties, renders services & importer
 VAT in an indirect tax pweds ipasa sa buyer, transferee, lessee (this rule is
applicable to existing contracts of sale/ lease of goods at the time of effectivity of RA Given na pag the ff: conditions are met, subject na sila (3,4,5) sa 12%
No. 7716
 “in the course of trade or business” – regular conduct/ pursuit of a commercial/ 1. Successful establishment & implementation of an enhanced VAT refund system
economic activity, by any person regardless if engaged sya sa nonstock, nonprofit that grants refunds of creditable input tax w/in 90days from filing VAT refnd
private org or gov’t entity application w/ Bureau
 basta services/ goods from non-resident foreign persons ay considered in the 2. All pending VAT refund claims as of Dec. 31, 2017 shall be fully paid in cash by
course of trade or busn so it’s VATable (just because domestic residents naman December 31, 2019
yung nagcoconsume) (unsure pa sa thought ehe)

 Sales to persons/ entities whose exemption under special laws/


Sec. 106. VAT on sale of goods/ Properties int’l agreements subject such to zero rate

A. dat Levied, Assessed and Collected on every sale/ barter a 12% VAT on gross
selling price or gross value in money to be paid by seller
B. Transactions deemed sale
o “goods and properties” includes tangibles & intangibles na measurable
a. Transfer, use/ consumption not in the course of busn of goods/
by money estimation
properties originally intended for sale
 Real properties held for sale/ for lease in the ordinary course of
b. Transfer to:
busn
i. SHs share of profits of VAT-registered people
 Right to use patent, copyright, design, etc., or other like property
ii. Creditors in payment of debt
or right
iii. Consignment of goods if actual sale not made w/in 60
 Right to use in the Ph of any industrial, commercial/ scientific
days
equipment
iv. Retirement from/ cessation of business
 Right to use motion picture films,films, tapes, etc
 Radio, tv, satellite transmission & cable tv time
o “gross selling price” – total amt of money/ its equivalent which the buyer
pays (excluding VAT) C. Changes in/ Cessation of status of a VAT-registered person – aapply din rules sa
- Kasama excise tax, if any (A) to goods disposed of a certain date kahit nagbago status ni VAT taxpayer or
o VAT-registered persons ! (0%) VAT maging nonVAT taxpayer na siya
 Export sales
1. Actual shipment of goods from Ph to foreign regardless of any shipping
arrangement na nakakaaffect; dat in accordance w/ rules and regulations of BSP D. Sales returns, allowances & Sales discounts – net the returns and allowances pag
2. Sale of raw materials/ packaging materials to a nonresident buyer but delivery granted ni VAT registered person in the quarter which refund is made; sales discount
ay sa resident enterprise paid for in acceptable foreign currency and in accordance na hindi conditional, excluded din from gross sales in the same quarter
with BSP
E. Authority of the commissioner to determine the appropriate tax base – Sec. 109. Exempt transactions
subsection (B) pag sale, barter or where gross selling price <<<<<<< actual market
value 1. Exempt from VAT
a. Sale/ importation of agri & marine food products in their original state,
livestock & poultry (kahit processed: drying, freezing, salting, toasting)
i. VAT exempt sugar – raw sugar cane
1. Raw sugar – polarimeter reading of < 99.5
Sec. 107. VAT on importation of goods

A. dat Levied, Assessed and Collected on every sale/ barter a 12% VAT based on
total value used by Customs in determining tariff & custom duties plus custom b. Sale/ importation of fertilizers; seeds, seedlings and fingerlings. Fish, prawn,
duties, excise taxes, if any, other charges; Where3 customs duties are based on livestock & poultry feeds including ingredients
quantity or volume of goods – VAT based sa landed cost plus excise taxes, if any i. Feeds for agri-animals
B. Transfer of goods by Tax-exempt persons
a. Exempt pa din sila, pag yung goods na imported ay nabenta
subsequently, the buyer bears the tax on importation; tax due shall c. Importation of personal & household effects of:
constitue a lien on the goods superior to all charges or liens on the goods, i. residents of the Ph returning from abroad
irrespective of possessor thereof ii. nonresident citizens coming to resettle in the Ph
(Goods should be exempt from custom duties)

Sec. 108. VAT on sale of services & Use or lease of properties d. – importation of professional instruments
- implements
A. 12% - tools of trade
Gross receipts – total amt of money orits equivalent representing the contract price inc. - occupation/ employment
amount charged for materials & advanced payments actually or constructively received during - wearing apparel
the taxable quarter - domestic animals
 vehicles/ vessels/ aircrafts/ machineries and other similar goods for use in
TRANSACTIONS SUBJECT TO 0% - services performed in the Ph by VAT registered manufacture (subj to duties, taxes & other charges)
persons that is:

1. Doing busn outside the Ph (Processing, manufacturing, repacking goods)


2. Services other than #1 e. Services subj to OPT (bold = exempt from VAT but subject to OPT)
3. Int’l agreements/ special laws i. Transport contractors – passengers by land
4. Services to persons engaged in int’l shipping/ int’l air transport including leases – - goods/ cargoes by land
exclusive lang for that purpose ii. Domestic carriers – passengers by air/sea
5. Services performed by subcontractors; contractors for enterprise (70% of total - goods/ cargoes by air/sea
annual production) Basta domestic carriers, vatable
6. Transport of passengers and cargo by air/ sea vessels from Ph to abroad iii. International carriers transporting cargo
7. Sale of power or fuel generated thru renewable sources of energy iv. Radio/ TV broadcasting with gross receipts not
exceeding P10M (non-vat registered)
v. Gross receipts of cabarets, day & night clubs
# 1,4,5 subject to 12% if masatisfy conditions same sa Export sales
f. Services by agri contract growers and milling for others
i. Dapat packaged service to toll growing (Siya nagpalaki
& sya magprep after) n. Sales by non-agri, non-electric & non-credit coop – CDA
i. share capital contribution less than or equal to P15,000

g. Medical, dental, hosp and vet services exclusive of professional fees


i. Lab services o. Export sales by nonVAT registered
ii. Yung meds purchased na included sa hospital bill for i. By VAT reg – 0%
in-patients
iii. Doctor’s fee paid by inpatient sa hospital
 Professional services rendered by professionals – subject to VAT if exceeding p. Sale of real properties – casual sales (not ordinary)
P3M; otherwise – OPT - utilized for low cost & socialized housing
- residential lot valued P1.5M & below
- house and lot and other residential stuff valued
P2.5M & below
h. Educational services – private educational institutions (accredited by DepEd,
- Sale of adjacent lots P1.5M & below
CHED, TESDA, those tendered by gov’t)
Beginning Jan 1, 2021 – shall only apply to:

- casual sales
i. Employer-employee
- utilized for socialized housing – RA 7279 (nana low cost housing)
j. Services rendered by regional/ area headquarters established in the Ph
- other residential stuff to be sold P2M & below
i. Acting as supervisory, communications & coordinating
centers
ii. Branches in the Asia-Pacific Region not earning income Imposition of VAT on Foreclosure sales
sa Ph
IF ORDINARY ASSET, VAT WHICHEVER IS HIGHER:

1. CONSIDERATION (BID PRICE)


k. Int’l agreements except those under Presidential Decree No. 529 2. FAIR MARKET VALUE
3. ZONAL VALUE

l. Sales by agri coop. of their own produce to their members/ nonmembers


– gotta be duly registered w/ CDA
q. Lease of residential unit w/ a monthly rental P15,000 & below
i. Sales by agri-coop of other’s produce to members i. P15,000 above – check total – P3M & below – OPT
ii. Importation nila ng equipment to be used directly & - P3M above – VAT
exclusively sa manufacturing agri produce

r. Sale, importation, printing/ publication of books, newspaper (not devoted


m. Gross receipts from lending acts only by credit/ multipurpose coop – principally to publication of advertisements)
registered w/ CDA i. Hard copy only
i. GIRL??? Pautang mo na, tax-an ka pa?
s. Transport of passengers via int’l transport (not subject to OPT) bb. Sale/ lease of goods/ properties or performance of services other that
transactions mentioned, the gross annual sales/ receipts do not exceed
P3M effective Jan. 1, 2018
t. Sale, importation or lease of passenger/ cargo vessels & aircraft for
domestic/ int’l transport

i. Dapat exception is subject to requirements on


restriction kemeru of MARINA
VAT exempt stuff may be subject to other percentage taxes except those exempt from
business taxes (made for livelihood or subsistence)
u. Importation of fuel, goods & supplies by persons engaged in int’l
shipping/ air transport
i. Such should be used exclusively for that purpose
ii. Dapat the transport is from Ph port to foreign port directly
(unless kelangan may stopover etc) Self-employed Individuals & professionals availing 8% tax – exempt

 May option lang the latter to use 8% if gross sales and/or receipts do not exceed
P3M
v. Services of bank, non-bank financial intermediaries performing quasi-  Pag lumampas, taxable @ 12% na siya starting the next quarter & update from
banking functions, other non-bank fin.intermediaries (money changer & non-vat to vat
pawnshops)
i. Subject to percentage tax

w. Sale/ lease of goods/ properties & services to senior citizens and PWDs (RA
99940

x. Transfer of property pursuant to Sec. 40 (C)(2) TRAIN

y. Association dues, membership fees & other assessment & charges collected
by homeowners assoc.

i. Purely reimbursement basis

z. Sale of gold to BSP (Effective Jan. 1, 2018)

aa. Sale of drugs & meds prescribed for diabetes, high cholesterol &
hypertension beg. Jan 1, 2019
COMPUTATION OF VAT PAYABLE Export sales by VAT
i. No VAT shall be imposed pag hindi sa territory icoconsume – Cross-
OUTPUT VAT (Sales/ Receipts x 12%) xx border Doctrine
INPUT VAT (Purchases x 12%) (xx)
ADVANCE VAT PAYMENT (xx) Export sales by nonVAT – vat exempt
VAT PAYABLE xx

ZERO RATED SALE OF GOODS


OUTPUT VAT  Actual export
1. ACTUAL SALE  Deemed export sales
2. TRANSACTIONS DEEMED SALE o Sale of raw & packaging materials to non-resident but delivered to
a. not really sales bec wala actual exchange local export oriented enterprise
b. input vat was already used as credit against output vat o Sale to export-oriented enterprise (70% of production dapat export)
o Export sales under EO No. 226
 Transfer, use or consumption of goods (inventory) not in the ordinary course of o Sale of gold to BSP
busn o Sale of goods, supplies, equipment & fuel to international operations
 Distribution of share in NI to SH na vat-registered – market value  Effectively zero rated – special laws/ int’l agreements
 Payment of debt – market value  Sales to PEZA entities
 Consigned goods not sold within 60 days (Goods returned are not deemed sold)  Foreign currency denominated sale
 Retirement of status (VAT to nonVAT) with respect to “goods on hand”– lower of o Applicable to goods except automobiles & non-essential goods subject to
cost and market value excise tax)
o Goods on hand:
 Ordinary assets
 Capital goods from: ZERO RATED SALE OF SERVICES
 Change of busn activity  Processing, manufacturing or repacking goods for other persons doing busn
 Approval of a request to cancel registration as VAT to outside Ph
nonVAT  Services performed by subcontractors/ contractors for enterprise na 70% keme
 Approval of a request to cancel registration as VAT to  Other services performed to nonresident, not engaged in business people outside
nonVAT after 3 consecutive years of voluntarily the country
registering as VAT  Services done to person/ entities under special laws/ agreements
 Approval of a request to cancel registration as VAT to  Services to persons engaged in int’l keme
nonVAT na hindi nag-exceed sa P3M within  Transport of passengers and cargo by domestic air/sea from Ph to foreign
12months  Sale of fuel from renewable sources of energy

3.
ZERO-RATED SALES – Input VAT from this ay pweds na:
a. Refund – di na kasama yung claimed against output tax; should be
filed w/in 2 years after quarter; Commissioner shall grant w/in 90
days
i. Improper – state in writing legal & factual basis
ii. Fail to act w/in 90 days - punishable
iii. Full or partial denial – taxpayer can appeal to CTA w/in 30 days
b. Claim against output tax
c. Claim as tax credit certificate against any internal revenue tax
ZERO RATED SALES NA INPUT TAX LANG ANG PWEDE SA OPTIONS NA TO.
INPUT VAT 5. Transitional – from nonVAT to VAT; who elects to be VAT reg
1. Local purchase a. Higher of:
2. Acquisition of capital goods i. 2% of beg. Inventory
a. Goods w/ useful life of more than 1 year ii. Actual VAT paid
b. Depreciable asset used directly or indirectly sa prod.
c. Costs more than P1M exclusive of VAT (total per month) 6. Standard – transactions with government or any of its instrumentalities,
Allowed ang amortization til December 31, 2021. agencies & GOCCs
a. 7% based on actual selling price
3. Importation b. 5% final VAT to be withheld by gov’t based on selling price also
a. Whether personal/ business use = taxable c. Actual input VAT attributable to sales to govt exceeds 7% of gross
b. Imported by Tax Exempt persons payments – excess ay expense of cost
i. 0 vat niya d. Actual input VAT attributable to sales to govt does not exceed 7% of gross
ii. If he plans to dispose it afterwards, buyer will bear tax on payments – excess ay income
importation

Net proceeds from gov’t


In General
Sales xx
Total value xx Output tax (Sales x 12%) xx
Customs duties xx VAT withheld ni gov’t (xx)
Excise tax xx Net proceeds xx
Other charges bef. Release xx xx
Tax base xx
12%
VAT Payable
VAT on Importation xx
Output tax (Sales x 12%) xx
Input tax xx
Based on qty/ Volume Standard Input tax xx
VAT withheld ni gov’t xx (xx)
Invoice amount xx Net proceeds xx
Customs duties xx
Excise tax xx
Other charges bef. Release xx xx Input tax closed
Tax base xx
12% Input tax (Purchase ng govt x 12%) xx
VAT on Importation xx Standard input tax (Selling price x 7%) (xx)
Closed to expense (income) xx
4. Presumptive – for persons/firms engaged sa processing of sardines, mackerel and
milk, and in manufacturing refined sugar and cooking oil, packed noodle based
instant meals
a. 4% gross value in money on purchase of agri products used as input
b. Exempt ang marine products BEAR IN MIND
LEASE OF REAL PROPERTY 1. Non-life insurance – 12% VAT
a. Gross receipts = total premium collections
Pag gross receipts does not exceed P3M and nonVAT registered – not subject to VAT b. VAT due from foreign are withheld sa local and to be remitted sa BIR
1. Commercial units – 12% VAT if located sa Ph regardless san nagcontract using BIR Form 1600
a. Advanced payment – Prepaid rent – taxable 2. Pre-need Companies – (?)
2. Residential units 3. Health Maintenance Organizations (HMOs) –
4. Franchise Grantees – 12% VAT
a. Electric utilities
b. Telephone & telegraph
SALE OF REAL PROPERTY
c. Toll road operations
Pag ordinary course of business d. Radio & tv broadcasting; except those w/c gross receipts do not exceed
P10M last year (Franchise Tax 3%)
Output vat: taxable 12% based on highest: 5. Millers – 12% VAT
a. Except millers of
 Selling price
i. Palay to rice
 Fair market value ii. Corn to corn grits
 Zonal value iii. Sugar cane to raw sugar
b. Basis: actual market value
6. Construction & Service Contractors
1. Cash basis a. May claim input tax on CIP; hindi applicable ang P1M threshold for
2. Installment basis capital goods
a. Initial payments shouldn’t exceed 25% of selling price 7. Recreational clubs – 12% VAT

Initial payments

Downpayment xx
Collections xx MIXED BUSINESS TRANSACTIONS
Interest xx
- Main concern is the allocation/ apportionment of input vat
Penalties & other charges xx
Excess of mortgage over cost xx xx
Initial payments xx
FILING OF VAT RETURNS

 Quarterly returns filed within 25 days following the closing of the taxable quarter
Output VAT  VAT registered person should pay the VAT monthly
 January 1, 2023 – filing and payment – within 25 days following the close of the
Year of sale = Initial Payment / GSP x higher of GSP or FMV taxable quarter

Next year = Collections/ GSP x higher of GSP or FMV Place – Payment – Bank accredited by CIR (RDO, Collection agent, Duly authorized
treasurer)
- No payment – monthly/quarterly return filed with (RDO/ LTDO/LTAD, Collection agent,
3. Deferred payment basis Duly authorized treasurer)
a. Initial payments exceed 25% - same sa cash sales
VAT EXEMPTION OF SENIOR CITIZENS AND PWDS PERSONS WITH DISABILITY

Senior citizens – Ph resident; 60 years & above A. At least 20% discount and vat exemption, if applicable, on goods and services for the
- dual citizen; Filipino citizen having resided at least 6 months exclusive use and enjoyment of the PWD
1. Fees and charges relative to utilization of hotels & other lodging, resto, recreation
VAT Exempt Sales & Min. discount of 20% centers
1. Medicine & drug purchases (influenza, pneumococcal vaccines, other essential 2. Admission fees (theaters, cinema, concert halls, circus, carnivals)
meds, accessories & equipment) 3. Meds (in all drugstores)
2. Professional fees of attending physician (private hosp), medical facilities, outpatient 4. Medical & dental services. Diagnostic & lab fees and professional fees of attending
clinics, home health care services doctors in all gov’t facilities and private hospitals
3. Medical & dental services. Diagnostic & lab fees 5. Fare – domestic air & sea travel
4. Fare – land travel 6. Fare – land transpo
5. Fare – domestic air transport; sea shipping vessels 7. Funeral & burial services of the PWD; beneficiary shall claim discount upon
6. Utilization of hotels & other lodging, resto, recreation centers presentation of death cert
7. Admission fees (theaters, cinema, concert halls, circus, carnivals) B. Educational assistance (in all levels, any school) Provided, PWD meet the minimum
8. Funeral & burial services of seniors admission requirements
C. The continuance of the same benefits and privileges given by GSIS, SSS and Pag
5% Discount on: IBIG as enjoyed in actual service
D. Special discounts in special programs for PWD on purchase of basic commodities
 Basic Necessities subject to DTI and DA
o Non vat exempt E. Provision of express lanes for PWD
o Total amount of purchase should not exceed P1,300 a week without
carryover
 Prime Necessities

NOTE:

 VAT exemption of seniors does not exempt from Percentage tax


 Pag on promotional discount ang product, avail either promo discount or 20% or
5% whichever is higher; never lower than 20% or 5%
 Meals intended for children can’t avail of 20% senior discount
 Alcoholic beverages
o not subject to 20% VAT especially when in bulk, buckets or cases
o 20% discount pag single serving
o purchased sa bar, club or cabaret – exempt from VAT subject to 18%
amusement tax
 CIGARS IS A NO
 Toll fees is a no