Atty.

Sababan - Vat Lecture

For instance the seller of the raw materials paid a value added tax of 45php, as far as the manufacturer
is concerned to him the vat paid by the seller is the input tax. So 120 -45 = 75, that is the one to be
remitted in the BIR.

Either you shift the burden of the payment of the tax to the consumer or buyer, or this is allowed but
this is katangahan or kabobohan, you shoulder it in the example the vat.

But majority do not ?? because of the ignorance, sir where is that law? It is in par 2 sec 105 of the nirc,
where the law says the taxpayer may shift the vat or the burden of the payment of tax may be shifted to
the consumer or buyer or if he is tanga, he will not shift the burden to consumer.

Ex. 1000(gross selling price) x 12% = 120, now here comes the buyer. Im going to purchase, ok 1000 plus
120 = 1020, but in the remittance with the BIR you will be allowed to claim input tax provided both the
manufacturer and the seller of raw materials are vat registered entity. If one of you is not a vat
registered entity, either the manufacturer or seller of raw materials, the formula would be the output
tax = vat. You will not be allowed to claim input. So 120, where did it came from?it came from the buyer.
Are you gonna remit all of the 120 to BIR? No, you will minus there the input. You remit that to the BIR,
if that’s the case 75 php. Where will the 45 pesos ko? Delihensya. The pocket of the manufacturer. Now
the problem if the manufacturer is using an accountant or book keeper the money will go to the money
of the accountant or bookkeeper. In one instance, a Chinese asked me, atty, sabi ng mga kaibigan ko
niloloko daw ako ng accountant ko, but atty, I determined the capital in the income, it is both intact, alin
kaya ung sinasabi ng mga kaibigan ko na niloloko ako. Un pala ung input. If you are an honest
bookkeeper, you will turn over the 45 to the manufacturer, e binulsa ng accountant. You see that 45 php
in a period of 1 yr will run to thousand or hundreds of thousands or even millions.

Assuming there is no shifting, output – input, tay bibili ka ng raw materials sa vat registered entity.
Because input tax will not allowed by the BIR if both the manufacturer and the seller of the raw
materials are not vat registered- both must be vat registered. Im not only talking about manufacturers,
this is applicable to all taxpayers paying vat.

2 requisites:

1. Must be in the trade or business of the taxpayer

2. The gross receipt