PRESENTS
Dec 08, 2014
PRESENTS
PRESENTS
TRANSACTIONS COVERED BY
VAT
Remember, you don’t have to be an accountant in the Philippines to fully grasp the purpose
of taxes.
Remember, you don’t have to be an accountant in the Philippines to fully grasp the purpose
of taxes.
At what scenario are we paying for it and why?
Remember, you don’t have to be an accountant in the Philippines to fully grasp the purpose
of taxes.
At what scenario are we paying for it and why?
Let’s find the transactions that govern
its scope.
New VAT Coverage
Image courtesy of FreeDigitalPhotos.net
New VAT Coverage
Image courtesy of FreeDigitalPhotos.net
New VAT Coverage
Sale of nonfood agricultural products; marine and forest products in
their original state by primary producer or owner of the land;
Sale of cotton and cotton seeds in their original state; Sale or importation of coal
and natural gas, in whatever form or state;
Sale or importation of petroleum products, including
raw materials for their production;
Image courtesy of FreeDigitalPhotos.net
Sale or Exchange of Services
Sale or exchange of services means the performance of all
kinds of services in the Philippines for others for a fee,
remuneration or consideration. It includes
those performed or rendered by the following:Image courtesy of FreeDigitalPhotos.net
Construction and service contractors; Stock, real estate, commercial, customs and immigration
brokers (subject to VAT under RA 7716);
Lessors of property, whether personal or real;
Persons engaged in warehousing services;
Lessors or distributors of cinematographic films; Persons engaged in milling (except palay into rice, corn into
corn grits and sugar cane into raw sugar), processing, manufacturing or repacking goods for others;
Proprietors, operators, or keepers of hotels, motels, resthouses, pension houses, inns, resorts;
Proprietors or operators of restaurants, refreshment parlors, cafes, and other eating places, including clubs and
caterers;
Dealers in securities;
Lending investors;
Transportation contractors on their transport
of goods or cargoes, including persons who
transport goods or cargoes for hire;
Other domestic common carriers by land, air
and water relative to their transport of goods or
cargoes;
Sales of electricity by generation,
transmission, and/or distribution companies;
Franchise grantees of electric utilities,
telephone and telegraph, radio and/or television
broadcasting companies whose annual gross
receipt of the preceding year exceeds P10M and
all other franchise grantees except those under
Section 119 of the Code;Image courtesy of FreeDigitalPhotos.net
Non-life insurance companies (except their crop insurances and premiums on reinsurance), including surety, fidelity, indemnity and
bonding companies;
Pre-need companiesSimilar services regardless of whether or not the performance thereof
calls for the exercise or use of the physical or mental faculties
The lease or the use of, or the right or privilege to use any copyright, patent, design or model, plan, secret formula or process, goodwill,
trademark, trade brand or other like property or right;
The lease or the use of, or the right to use of any industrial, commercial or scientific equipment;
The supply of scientific, technical, industrial, or commercial knowledge or information;
The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the application or enjoyment of any
such property,
The supply of services by a non-resident person or his employee in connection with the use of property or rights belonging to, or the
installation or operation of any brand, machinery, or other apparatus purchased from such non-resident person;
The supply of technical advice, assistance or services rendered in connection with technical management or administration of any scientific,
industrial or commercial undertaking, venue, project or scheme;
The lease of motion picture films, films, tapes, discs and;
The lease or the use of or the right to use radio, television, satellite transmission and cable television time.
Sale by the artist of his works of art, literary works, musical compositions and similar creations, or his services performed for the production of such
works;
Services rendered by doctors of medicine duly registered with the PRC;
Services rendered by lawyers duly registered with IBP;
Common carriers by air and sea relative to their transport of passengers
from one place in the Philippines to another place in the Philippines
Image courtesy of FreeDigitalPhotos.net
Toll road operations
PAGCOR and its licensees and
franchisees;
Sale of electricity by generation, transmission and distribution companies
(except sale of power fuel generated through renewable sources of energy
which is 0%); and
Sale by electric cooperatives as well as importation of machines and equipments
including spare parts.
Zero Rated Transactions
Zero Rated Sale of Goods
EXPORT SALES
EXPORT SALES
Sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);
1. Sale of raw materials or packaging materials to a non-resident buyer for delivery to a resident local export-
oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the
said buyer’s goods and paid for in acceptable foreign currency and accounted for in accordance with the rules
and regulations of the BSP;
2. Sale of raw materials or packaging materials to export-oriented enterprise whose export sales exceed
seventy percent (70%) of total annual production;
3. Sale of gold to BSP and;
4. Those considered export sales under E.O. 226, otherwise known as the Omnibus Investment Code of
1987, and other special laws.
5. Sale of goods, supplies, equipment and fuel to persons engaged in international shipping or
international air transport operations.Image courtesy of FreeDigitalPhotos.net
Foreign Currency Denominated Sale
Sale to a non-resident of goods except sale or importation of automobiles and non-essential goods mentioned in Sec. 149 and 150, NIRC, assembled or
manufactured in the Philippines for delivery to a resident in the Philippines paid for in acceptable
foreign currency and accounted with the rules and regulation of the BSP.
Exemptions under Special Laws or International Agreement
Sales to persons or entities or entities whose exemption under special laws or international agreements to which the Philippines is
a signatory effectively subjects such sales to zero-rate.
Image courtesy of FreeDigitalPhotos.net
Zero Rated Sale of Services Processing, manufacturing or repacking goods for other persons doing business outside the
Philippines, which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP;
Services other than those mentioned in the preceding paragraph, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the
rules and regulations of the BSP;
Services rendered to persons or entities whose exemption under specials laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services
to zero percent (0%) rate;
Services rendered to vessels engaged exclusively in international shipping; and
Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed seventy percent (70%) of total
annual production.
Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country. Gross receipts of international air carriers doing business in the
Philippines and international sea carriers doing business in the Philippines are still liable to a percentage tax of three percent (3%) based on their gross receipts as provided for in
Sec. 118 of the Tax Code but shall not to be liable to VAT; and
Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other emerging
sources using technologies such as fuel cells and hydrogen fuels.
Effectively Zero Rated Transactions
Effectively Zero Rated Transactions
Effectively zero rated sale of goods and properties refer to sale of goods and properties by a VAT registered person to a person or entity who was granted indirect tax exemption under special laws.
Effectively Zero Rated Transactions
Effectively zero rated sale of goods and properties refer to sale of goods and properties by a VAT registered person to a person or entity who was granted indirect tax exemption under special laws. Effectively zero rated sale of services
– refer to the sale of services by a VAT registered person to a person or entity who was granted indirect tax exemption under special laws or international agreements.
Effectively Zero Rated Transactions
Effectively zero rated sale of goods and properties refer to sale of goods and properties by a VAT registered person to a person or entity who was granted indirect tax exemption under special laws. Effectively zero rated sale of services
– refer to the sale of services by a VAT registered person to a person or entity who was granted indirect tax exemption under special laws or international agreements.Example : (IRRI, ADB, Embassy)
Effectively Zero Rated Transactions
Effectively zero rated sale of goods and properties refer to sale of goods and properties by a VAT registered person to a person or entity who was granted indirect tax exemption under special laws. Effectively zero rated sale of services
– refer to the sale of services by a VAT registered person to a person or entity who was granted indirect tax exemption under special laws or international agreements.Example : (IRRI, ADB, Embassy)
Cases of zero rated sales of goods and services shall require prior application with the Revenue District Office for effective zero-rating. Without an approved application for effective zero-rating, the transaction otherwise entitled to zero rating shall be considered exempt
Transactions Deemed Sale
• Transfer, use or consumption not in the course of business of goods or properties originally intended for sale or for use in the
course of business
• Distribution or transfer to:o Shareholders or investors as share in the profits of the VAT – registered persons; oro Creditors in payment of debt• Consignment of goods if actual sale is not
made within sixty (60) days following the date said goods were consigned;
• Retirement from or cessation of business, with respect to inventories of taxable goods existing as such retirement or cessation; and
• Change in business registration status (VAT to Non-VAT)
Image courtesy of FreeDigitalPhotos.net
Reference: www.bir.gov.ph
Disclaimer: New and subsequent BIR rulings, issuances and/or laws may render the whole or part of the article obsolete or inaccurate. For more information, please inquire or consult with the BIR.
team
would be happy to assist you!
Office Address:Unit 302 Fabricare Building 591Alabang-Zapote RoaAlmanza I Las Pinas City
Telephone Numbers:+63 2 8565665
Mobile Number:
+63 906 4788373 Email Address: [email protected]:
www.jclbpo.com