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IVX.

TRANSITIONAL AND PRESUMPTIVE INPUT TAX


A. TRANSITIONAL INPUT TAX: applied on the inventory on hand as the
effectivity of the VAT registration of taxpayers who:
1. Became VAT registered persons upon exceeding the threshold within
any 12 month period;
2. Voluntary registers as VAT payer even if business does not exceed
threshold (except RTV and satellite franchises which has threshold of
P10M); and
3. Already a VAT registered persons involved in VAT exempt transactions,
but becomes a taxable transaction by new or amendatory law.
B. ALLOWED TRANSITIONAL INPUT TAX CREDIT
1. 2% of the value beginning inventory on hand;
2. Actual VAT paid on such goods, materials, and supplies.
*Prior payment of tax is not required to avail of the 2% transitional input tax
credit. All that is required is for the taxpayer to file a beginning inventory
with the BIR.
C. PRESUMPTIVE INPUT TAX: applied to persons or firms involved in
1. Processing of milk, mackerel, and sardines;
2. Manufacturing of cooking oil, packed noodles-based instant meal, and
refined sugar.
*Presumptive input tax is 4% of the gross value in money of their purchases
of primary agricultural products used as inputs to their production.

XV. WITHOLDING VAT

On Payments by Government: subject to 12%. However, the


government is required to deduct and withhold 5% for its purchases.
On Payments to Non-residents: shall withhold 12% VAT, with respect
to:
o Lease or use of properties or property rights owned by nonresidents; and
o Services rendered in the PH by non-residents.

A. STANDARD INPUT TAX: input tax attributed to vatable sales to government


is not creditable against output tax on sales to non-government entities.

Government or any of its political subdivisions shall deduct and withhold


5% of the gross payments; remaining 7% effectively accounts for the
standard input tax.
If actual input VAT attributable to sale to government exceeds 7% of the
gross payments, excess forms part of the sellers expense or cost.
If actual input VAT attributable to sale to government is less than 7% of
gross payments, the difference must be deducted to sellers expense or
cost.

XVI. SUBSTANTIATION OF INPUT VAT


A. TIMING FOR CLAIMING INPUT VAT
Input tax credit on importation of goods or domestic purchase by a VATregistered person shall be creditable:
1. To the importer, upon payment of VAT prior to the release of goods
from customs;
2. To the purchaser of domestic goods or properties, upon consummation
of sale;
3. To the purchaser of services, lessee, or licensee, upon payment of
compensation, rental, royalty and fee;
4. To the purchaser of real property, (if cash/deferred payment upon
consummation of sale); and (if installment basis every installment).
B. REQUIRED SUPPORTING DOCUMENTS
TRANSACTION
REQUIRED DOCUMENTS
Input taxes on domestic purchases
VAT invoice
Input tax on purchase of real property
Cash/Deferred Basis
Public instrument, VAT invoice for the
entire selling price, and Non-VAT Ors
for initial and succeeding payments
Installment Basis
Public instrument and VAT OR for
every payment
Input tax on domestic purchases of
VAT OR
services
Input tax on importation of goods
Import entry and other document
showing actual payment of VAT on
the goods
Transitional Input Tax
Inventory of goods as shown in a
detailed list to be submitted to the
BIR
Input tax on Transactions Deemed
Required invoices
Sale
Input tax from payments made to
Monthly remittance return of VAT
non-residents
withheld, filed by the resident payor,
in behalf of the non-resident,
evidencing remittance of VAT due
Advance VAT on sugar
Payment order showing payment of
the advance VAT

XVII.

REFUND OR TAX CREDIT OF EXCESS INPUT VAT

A. CLAIMS FOR REFUND/TAX CREDIT CERTIFICATE OF INPUT TAX


1. Zero-rated and Effectively zero-rated sales of goods, properties,
and services
Must comply with the following criteria:
a. Taxpayer is VAT registered;
b. Engaged in zero-rated or effectively zero-rated sales;

c. Input taxes are due or paid;


d. Input taxes are not transitional input taxes;
e. Input taxes have not been applied against output taxes during and in
the succeeding quarters;
f. Input taxes claimed are attributable to zero-rated or effectively zerorated sales;
g. Foreign currency exchange proceeds have been duly accounted for in
accordance with BSP rules and regulations;
h. Where both zero-rated or effectively zero-rated sales, and taxable or
exempt sales; and the input taxes cannot be directly and entirely
attributable to any of these sales, input taxes shall be proportionately
allocated on the basis of sales volume; and
i. Claim is filed within 2 years after the close of the taxable quarter when
such sales were made. (in contrast to the period of filing an action to
recover taxes already paid which is reckoned from the date of
payment).
B. CANCELLATION OF REGISTRATION
a. VAT-registered person may apply for the issuance of tax credit
certificate for any unused input tax within 2 years from the
cancellation of registration. (Such may be used in the payment of
other internal revenue taxes.)
b. Applied when cancellation of registration is due to: (1) retirement from
or cessation of business; and (2) change in/or cessation of status.
c. Cancellation of registration shall be effective from the first day of the
following month.
C. MANNER AND PERIOD WHICH REFUND OR TAX CREDIT OF INPUT
TAXES SHALL BE MADE:
a. Filed with the appropriate BIR Office or Revenue District Officer having
jurisdiction over the principal place of business of the taxpayer.
b. Refunds shall be made upon warrants drawn by BIR.
c. Application for tax credit or refund must be decided within 120 days
from the submission of complete documents.
d. After the lapse of this period, without any action, the aggrieved
party may, within 30 days, elevate the case to CTA.
e. Failure of the taxpayer to wait for the decision or the lapse of 120 days
will render the judicial claim premature.

XVIII.

Input VAT attributable to zero-rated sales incurred by the taxpayer prior to


VAT registration may not be subject to refund.
One of the conditions for entitlement to refund is that taxpayer should be
VAT registered.

INVOICING REQUIREMENTS

A. VAT REGISTERED PERSON SHALL ISSUE:


a. VAT Invoice for every sale, barter, or exchange of goods or
properties;

b. VAT Official Receipt for every lease of goods or properties, and for
every sale, barter, or exchange of services
B. INFORMATION CONTATINED IN VAT INVOICE OR RECEIPT
1. Statement that the seller is a VAT-registered person;
2. Total amount paid by the purchaser with the indication that such
amount includes VAT;
3. Date of transaction, quantity, unit cost, and description of goods;
4. In case of sales in the amount of P1,000 or more and the sale is made
to a VAT registered person, the name, business style, address, and TIN
of the purchaser.

Failure or refusal to comply with the requirement (that the amount of tax
be shown as a separate item in the invoice or receipt) shall upon
conviction:
o Punished by a fine of not less than P1,000 but not more than
P50,000; and
o Imprisonment of not less than 2 years but not more than 4 years.

IXX. TIME FOR FILING A RETURN

Every person liable to pay VAT shall file a:


o Monthly return not later than the 20th day following the end of
each month;
o Quarterly return of the amount of his quarterly gross sales or
receipts, within 25 days following the close of the taxable quarter.
A VAT-registered person shall pay the VAT on a monthly basis.