Taxation 08 - Value Added Tax

7/28/2019 Taxation 08 - Value Added Tax

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VAT defined

• It is a tax on the value added to the purchase

price or cost in the sale or lease of goods,

properties, or services in the course of trade

or business.

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Transactions subject to VAT

• In the course of

trade/business

– Sells

– barters

– Exchanges

– Leases goods or properties

(including deemed sales)

– Renders services

• Whether or not it thecourse of trade or business

– Imports goods

provided the

aggregate

sales/receiptsexceeds

P1,919,500

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EXEMPT TRANSACTIONS

a) Sale of non-food agricultural products, marine and forest products intheir original state by the primary producer or the owner of the land

where the same are produced.

b) Sale of cotton and cotton seeds in their original state; and copra;

c) Sale or importation of agricultural and marine food products in their

original state, livestock and poultry of a kind generally used as, or

yielding or producing foods for human consumption; and breeding

stock and genetic materials thereof;

d) Sale or importation of fertilizers; seeds, seedlings and fingerlings;

fish, prawn, livestock and poultry feeds, including ingredients, whether

locally produced or imported, use 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)



EXEMPT TRANSACTIONS

e) Sale or importation of coal and natural gas, in whatever form or

state.

f) Importation of passenger and/or cargo vessels of more than five

(5,000) tons;

g) Importation of personal and household effects belonging to the

residents of the Philippines returning from abroad and nonresident

citizens coming to resettle in the Philippines;

h) Importation of professional instruments and implements, wearing

apparel, domestic animals and personal household effects (except anyvehicle, vessel, aircraft, machinery, other goods for use in the

manufacture and merchandise of any kind in commercial quantity)

belonging to person coming to settle in the Philippines.



EXEMPT TRANSACTIONS

i) Services subject to percentage tax; j) Services rendered by individuals pursuant to employer-employee

relationship;

k) Transactions which are exempt under international agreement;

l) Sales by agricultural cooperatives duly registered with the CDA;

m) Sales by electric cooperatives duly registered by the CDA;n) Gross receipts from lending activities by credit and multi-purpose

cooperative duly registered with the CDA

o) Sales by non-agricultural, non-electric and non-credig cooperatives

duly registered with the CDA;

p) Export sales by persons who are not VAT-Registeredq) Sale of real properties not primarily held for sale in the ordinary

course of business;

r) Lease of a residential unit with a monthly rental not exceeding

P8,000.



VAT Payable

Output Tax ( Sales x 12%) - P x x x

Less Input Tax (Purchases x 12%) - x x xVAT payable - P x x x

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Gross Receipts

• Contract price, compensation, service fee,

rental or royalty

• Including the amount charged for

materials supplied with the services• Deposits applied as payments for services

rendered

• Advance payment actually or

constructively received• Excluding the VAT

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Invoicing Requirement



INPUT TAX

• Is the value added tax due from or paid by a

VAT-registered person in the course of his

trade or business.

– Any input tax evidenced by a VAT invoice or official

receipt shall be creditable against the output tax.

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Sources Input Tax

• Purchase or importation of goods

– For sale

– For conversion into or intended to form part of a finished

product for sale including packaging materials – For use as supplies in the course of business

– For use as materials supplied in the sale of service

– For use in trade or business for which deduction for

depreciation / amortization is allowed under the Tax Code

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Sources of Input Tax (cont…)

• Purchase of real properties for which the VAT

was actually paid

• Purchase of services for which the VAT was

actually paid

• Transitional input tax

•

Presumptive Input tax• Standard Input Tax (gov’t. transaction)

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Taxation 08 - Value Added Tax

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