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Value

Added Tax Balbal, operates a business. During the year, his


gross receipts amounted to P1,200,000. Is he
- Is a tax on consump4on levies on the sale, liable to pay value-added tax?
barter, exchange or lease of goods or proper4es
and services in the Philippines and on If VAT registered regardless of the amount,
importa4on of goods in the Philippines YES.

- Eec4ve January 1, 1988 If he is not registered, NO.

- Execu4ve Order No 273 If not VAT-registered but P2,800,000 : YES

- Husband and the wife shall be considered as If not VAT-registered and he will just
separate taxpayers. commence business, DEPENDS.

- Three branches of the government are not o A. If he will realize gross sales or
subject to tax. But it is taxable, if it sells goods receipts more than P1,919,500. YES
or services in the course of business.
o B. Otherwise. Exempted from VAT
- E x a m p l e : g o v e r n m e n t e n 4 4 e s a n d
instrumentali4es, including government-owned If not VAT-registered but his gross receipts is
or controlled corpora4ons approximately P60.00, NO. He is classied
as a marginal income earner.
- Scope:
Marginal income earner individual
o Sale, barter, or exchange of goods and deriving gross sales or receipts of
proper4es not exceeding P100,000 during any
12-month period.
o Sale of services
In the course of trade or business: If does
o Lease of goods and proper4es not exceed 100,000 during the 12 months,
o Importa4on of goods, whether in the it is considered principally for subsistence or
trade of course of business or not. livelihood

Persons individual, trust, estate, -Non-resident persons who perform


partnership, corpora4on, joint venture, services are deemed to be making sales in
coopera4ve or associa4on the course of trade or business

Taxable person person any liable for the Excis / VAT / May be subject to VAT and Excise at
the same 4me
payment of value-added tax e Tax

Persons subject to VAT : gross VAT X OPT X No situa4on where it can be subject to
VAT and OPT at the same 4me
annual receipts during any year If subject to OPT, no longer subject to
VAT
or in any 12-month period
exceed 1,919,500php or those OPT / Excise / If subject to OPT, can be subject to
excise tax
who does not exceed this Tax
amount, but registered under
the value-added tax system. Registra>on of VAT Taxpayers
(Either of the two will be liable
-any person who in the course of trade or
to pay the tax)
business, sells, barters, exchanges or engages in the sale
EXAMPLE : of service subject to VAT, shall register with the
appropriate Revenue District Ocer (RDO) and pay an twenty-ve days following the close of each
annual registra>on fee of P500 for every separate and taxable quarter.
dis4nct businesses before the start of such and every
year before the 31st day of January. - Monthly VAT declara>ons of a taxpayer, shall
be led and the taxes paid not later than the
Mandatory Registra>on: 20th day of the month

1. His gross sales or receipts for the past 12 - The return shall be led with the tax paid to an
months other than those exempt, have authorized agent bank, Revenue Collec4on
exceeded P1,919,500 Ocer, or duly authorized city or municipal
treasurer in the Philippines
2. There are reasons to believe hat his gross sales
or receipts for the next twelve months will Excess Output or Input Tax
exceed P 1,919,500
-input tax exceeds the output tax, excess shall be carried
Op>onal VAT Registra>on of VAT Exempt persons over to the succeeding quarter or quarters

- Any person who elects to be registered shall not VAT on Sale of Goods or Proper>es: Sec>on 106, Tax
be allowed to cancel his registra4on for 3 years. Code of the Philippines

- Taxpayer may apply for registra4on not later - Goods or proper4es shall mean all tangible
than ten days before the beginning of the and intangible objects which are capable of
calendar quarter pecuniary es4ma4on and shall include:
a. Real proper4es held primarily for sale to
- Commissioner of Internal Revenue may deny customers or held for lease in the ordinary
any applica4on for registra4on course of trade or business;
b. The right or the privilege to use patent,
- Once registered, he is liable to Output Tax and copyright, design or model, plan secret
be en4tled to input tax credit beginning the 1st formula or process, goodwill, trademark,
day of the month trade brand or other like property or right;
c. The right or the privilege to use in the
Cancella>on of Registra>on Philippines of any industrial, commercial or
scien4c equipment;
1. Only if he makes wricen applica4on where he d. The right or the privilege to use mo4on
can demonstrate to the CIR that his gross sales picture lms, lms, tapes and discs; and
e. Radio, television, satellite transmission and
will not exceed P1,919,500.
cable, television 4me.
2. He has ceased to carry on his trade or business - 12% of the gross selling price or gross value in
money of the goods or proper4es sold, bartered
Others: or exchanged, such tax to be paid by the seller
or transferor
1. Change of ownership
Gross selling price: total amount of
2. Dissolu4on of partnership money or its equivalent which the
3. Merger or consolida4on with respect to the purchaser pays or is obligated to pay to
dissolved corpora4on the seller in considera4on of the sale,
barter, or exchange of the goods or
4. Failed to actually start a business proper4es, including excise tax, if any
and excluding value-added tax.
Filling of return and payment of VAT

- The taxpayer shall le a quarterly return of the


amount of his gross sales or receipts within
o In the case of sale, barter, or exchange Sales on Account 565, 800
of real property, gross selling price shall
mean: Sales returns &

i. The considera9on stated in the sales Allowances 31, 548


document or zonal value whichever Sales Discounts 35,250
is higher

ii. In the absence of zonal value, the


market value shown in the latest Answer:
declara9on or the considera9on,
whichever is higher Cash sales 453,200

o Deduc>ons from gross selling price Sales on Account 565, 800

Sales returns and allowances Gross Selling Price 1,019,000

Sales discounts Deduc4ons (66,798)

- Compu>ng the amount of VAT Tax Base 952,202

a. Inclusive of VAT mul4ply by 3/28 Tax base: refers to the amount on which
the 12% rate of the VAT is applied
Ex. VAT(112,000 x 3/28) = P12,000

b. Exclusive of VAT mul4ply by 12%


Transac4ons deemed sale
Ex. VAT(100,000 x 12%) = P12,000
o No actual sale of goods (goods used for
o When to apply 12% or 3/28? personal use or for employees or for
any purposes other than sale) such
a. 3/28 inclusive of tax, total transac4ons are subject to VAT. The
invoice price, VAT inclusive following transactions shall be deemed
sale:
b. 12% - taken from the books, A. Transfer, use or consumption not
exclusive of tax, VAT/tax not in the course of business of
goods or properties originally
included, gross selling price, intended for sale or for use in the
gross receipts course of business;
B. Distribution or transfer to:
- Determina>on of Tax a. Shareholders or investors
as share in the profits of
VAT PAYABLE: the VAT registered
persons: or
Output Tax (sale) Pxx b. Creditors in payment of
debt;
Less: Input tax (purchase) (xx) C. Consignment of goods if actual
sale is not made within sixty (60)
VAT Payable xx days following the date such
goods, were consigned; and
Example: D. Retirement from or cessation of
business, with respect to
Tiberio Company inventories of taxable goods
existing as of such retirement or
cessation.
Cash sales 453,200
- Example:
Paulo Avelino is engaged in merchandising - Foreign Currency Denominated Sale
business. His sales invoice and other data during -sale to a nonresident of goods
the month of January are shown below. - Except:
a. those men4oned in Sec4ons
Cash Sales P770,000
149 and 150
Sales returns on cash sales 55,000
Account sales 495,000 b. assembled or manufactured
Goods consigned: in the Philippines for delivery to a
January 10 of the current year 265,000 resident in the Philippines
November 10 of the preceding c. paid for in acceptable foreign
Year 16,500 c u r re n c y a n d a c co u nte d fo r i n
Goods taken for personal use 18,150 accordance with the rules and
Goods taken as payment to creditors 25,850 regula4ons of the Bangko Sentral ng
Purchases of merchandise 1,008,000 Pilipinas (BSP).
Purchase of supplies 89,600 - Sales to persons or en44es whose exemp4on
Telephone bills on domestic calls 3,360 under special laws or interna4onal agreements
to which the Philippines is a signatory eec4vely
Compute the following:
subjects such sales to zero rate.
a. Output Tax 136,125
b. Input Tax 117,960 - Export Sales
c. VAT Payable 18,165 o The sale and actual shipment of goods
from the Philippines to a foreign
Computation: country, irrespec4ve of any shipping
arrangement that may be agreed upon
Cash Sales, net (770,000-55,000) 715,000 which may inuence or determine the
Account Sales 495,000 transfer of ownership of the goods so
Consigned Goods (Nov.10) 16,500 exported and paid for in acceptable
Goods taken for personal use 18,150 foreign currency or its equivalent in
Goods taken as payment to creditors 25,850 goods or services, and accounted for in
Total 1,270,500 accordance with the rules and
Multiply 3/28
regula4ons of the Bangko Sentral ng
Output Tax 136,215
Pilipinas,(BSP);
Purchases of merchandise 1,008,000 o Sale of raw materials or packaging
Purchase of supplies 89,600 materials to a nonresident buyer for
Telephone bills on domestic calls 3,360 delivery to a resident local export-
Total 1,100,960 oriented enterprise to be used in
Multiply 3/28 manufacturing, processing, packing or
Input Tax 117,960 repacking in the Philippines of the said
buyer's goods and paid for in acceptable
Output Tax 136,215 foreign currency and accounted for in
Less: Input Tax 117,960 accordance with the rules and
VAT Payable 18,165 regula4ons of the Bangko Sentral ng
Pilipinas (BSP):
Zero Rated Transactions
o Sale of raw materials or packaging
- Zero rated transac4ons are s>ll taxable materials to export-oriented enterprise
transac>ons even if the rate has been set to whose export sales exceed seventy
zero p e r c e n t ( 7 0 % ) o f t o t a l a n n u a l
- To be subject to zero rate tax, the seller must be produc9on
VAT-registered person because if he is not VAT o Sale of gold to the Bangko Sentral ng
registered, the transac4ons entered by him are Pilipinas(BSP);
exempt from tax. o Those considered export sales under
- Within 2 years aqer the close of the taxable Execu>ve Order No. 226, otherwise
quarter when the sales were made, the seller known as the Omnibus Investment
may apply for the issuance of a tax credit Code of 1987, and other special laws;
cer9cate or refund and
- The following sales by VAT registered persons o The sale of goods, supplies, equipment
are zero rated: and fuel to persons engaged in
international shipping or Insurance 8,000 2,500
international air transport
operations Other Changes 12,500 4,000
- VAT on Importa>on of Goods: Sec>on 107, Tax Facilita4on fee 10,000 -
Code of the Philippines
F r e i g h t f r o m 6,000 2,300
customs house
Importation is the act of bringing to warehouse,
goods and merchandise into a country net VAT
from a foreign country

Importer any person who brings Aqer 20 days, the goods intended for
goods into the Philippines, whether or sale were sold to Robin for P812,000.
not made in the course of trade or
business (sale, for use in the business Compute the VAT Payable on the
or for personal use)
12% tax based on the total value used 1. Importa4on if the tari and customs du4es
by the Bureau of Customs, plus customs were based on volume or quan4ty
du>es, excise taxes, if any and other
charges (legi4mate expenses only, for 2. Sale if the input tax is based on quan4ty of
example, facilita4on expenses are goods imported
illegal), insurance, freight, postage,
commission, interest, bank charges, - Computa4on (see the comments)
wharfage dues, arrastre charges,
brokerage fee, stamps, processing fee, Transfer of Goods by Tax-exempt Persons
customs duty, excise taxes, storage fee - In the case of tax free importa9on of goods into
and similar charges the Philippines by persons, en99es or agencies
- Payment of tax shall be made by the importer exempt from tax where such goods are
prior to the release of such goods from the subsequently sold, transferred or exchanged in
customs duty the Philippines to non-exempt persons or
enBBes, the purchasers, transferees or
o Customs du4es are determined on the recipients shall be considered the importers
thereof, who shall be liable for any internal
basis of the quan4ty or volume, VAT
revenue tax on such importa>on. The tax due
shall be based on the landed cost plus on such importa4on shall cons4tute a lien on
excise taxes the goods superior to all charges or liens on the
goods, irrespec4ve of the possessor thereof.
Landed cost = invoice amount + - Example:
c u sto m s d u 4 e s + f re i g ht Papa Libre, a tax-exempt person, imported
insurance + other charges goods from Japan. Later, he sold them to Mina
Malas, a non-exempt person. Who shall be
- Example: liable to pay the tax?
o Mina Malas shall be considered as the
Miranda imported goods from Japan. The importer and shall be required to pay
following are the data rela4ve to such the VAT due to such importa4on.
importa4on.
VAT on Sale of Services and Use or Lease of Proper>es:
For Sale Own Use Sec>on 108, Tax Code of the Philippines
-12% of gross receipts derived from the sale or
Invoice amount 9,500 3,000
exchange of services, including the use or lease of
(S1=42)
proper4es.
Du4able value 11,200 5,200 To be subject to VAT, the following requirements
must be sa4sed:
Customs du4es 10,500 3,100
1. The service must be performed in the
Freight 6,000 2,800 course of trade or business.
2. It must be performed in the Philippines
3. Considera4on must be received actually or h. Proprietors or operators of restaurants,
construc4vely refreshment parlors, cafes and other ea>ng
4. The transac4on is not exempt under the places, including clubs and caterers;
Code, special laws or interna4onal For both g and h:
agreements Gross receipts does not include:
Service charges billed
- Sale or exchange of services means the separately and actually
performance of all kinds of services, including distributed to employees and
the following: waiters
a. Those performed or rendered by construc>on Actual cost of the calls, fax,
and service contractors cable, etc. for the concerned
telecommunica4on companies
b. Stock, real estate, commercial, customs and VAT passed on to customers
immigra4on brokers Local taxes charged
broker- bring par4es together
or to bargain for them
custom broker engaged in i. dealers in securi>es;
transpor4ng with hired trucks for
delivery of goods for customers from
the customs premises to their place of j. Lending investors;
establishment for a fee
real estate broker- engaged in
selling of real property of others for a k. Transporta>on contractors on their
fee transport of goods or cargoes, including
commercial broker sh persons who transport goods or cargoes for
brokers, sales agent for a commission, hire and other domes4c common carriers by
agent or salesman in the buying & land rela4ve to their transport of goods or
selling of securi4es paid solely on cargoes;
commission Except:

c. Lessors of property, whether personal or Those who transport


real; passengers for hire by land are
not subject to VAT because
d. Warehousing services they are subject to Common
-engage in receiving and storing Carriers Tax of 3%
goods for other for prot
- receiving goods to be stored in l. Common carriers by air and sea rela4ve to
his warehouse for hire their transport of passengers, goods or
- keeping and storing goods for cargoes from one place in the Philippines
others, as a business and for use to another place in the Philippines;
Transports of passengers and
e. Lessors or distributors of cinematographic cargoes by domes4c air or sea
lms
vessels from the Philippines to a
f. Persons engaged in milling (except millers foreign country of carrier are
of palay into rice, corn into grits, and subject 0% VAT.
sugarcane into raw sugar), processing,
manufacturing or repacking goods for m. Sales of electricity by genera>on
others companies, transmission, and distribu>on
companies;
g. Proprietors, operators or keepers of hotels, Genera>on companies- authorized by
motels, rest-houses, pension houses, inns, Energy Regulatory Commission to
resorts, caterers, theatres and movie operate facili4es in the genera4on or
houses; produc4on of electricity
Transmission Companies owns and of any brand, machinery or other
conveys electricity through the high apparatus purchased from such
voltage backbone system nonresident person;
Substransmission Companies delivery f. The supply of technical advice,
services below the transmission assistance or services rendered in
voltages connec4on with technical
Distribu>on Companies operate a management or administra>on of
distribu4on system any scien>c, industrial or
n. Services of franchise grantees of electric commercial undertaking, venture,
u>li>es, telephone and telegraph, radio project or scheme
and television broadcas>ng and all other g. The lease of mo>on picture lms,
franchise grantees lms, tapes and discs; and
Except: Franchise grantees of radio and/ h. The lease or the use of or the right
or television broadcas4ng companies to use radio, television, satellite
whose annual gross receipts of the transmission and cable television
preceding year do not exceed P10,000,000 >me.
and franchise grantees of gas and water Gross Receipts:
u>li>es Total amount of money or its equivalent
o. Non-life insurance companies (except their r e p r e s e n 4 n g t h e c o n t a c t p r i c e ,
crop insurances), including surety, delity, compensa4on, service fee, rental or royalty,
indemnity and bonding companies including deposits, advanced payments
actually or construc4vely received during
p. Similar services regardless of whether or the taxable quarter
not the performance thereof calls for the
exercise or use of the physical or mental Transac4ons subject to zero percent (0%)
facul4es. rate:
o Processing, manufacturing or repacking
Other sale or exchange of services goods for other persons doing business
a. The lease or the use of or the right outside the Philippines which goods are
or privilege to use any copyright, subsequently exported,
patent, design or model plan, o Services other than those men4oned in
secret formula or process, the preceding paragraph rendered to a
goodwill, trademark, trade brand person engaged in business conducted
or other like property or right; outside the Philippines or to a
b. The lease or the use of, or the right nonresident person not engaged in
to use of any industrial, business who is outside the Philippines
commercial or, scien>c when the services are performed, the
equipment; considera4on for which is paid for in
c. The supply of scien>c, technical, acceptable foreign currency and
industrial or commercial accounted for in accordance with the
knowledge or informa>on; rules and regula4ons of the Bangko
d. The supply of any assistance that is Sentral ng Pilipinas (BSP);
ancillary and subsidiary to and is o Services rendered to persons or en44es
furnished as a means of enabling whose exemp4on under special laws or
the applica4on or enjoyment of any interna4onal agreements to which the
such property, or right as is Philippines is a signatory eec>vely
men4oned in subparagraph (2) or subjects the supply of such services to
any such knowledge or informa4on zero percent(0%) rate;
as is men4oned in subparagraph o Services rendered to persons engaged
(3); i n i n t e r n a > o n a l s h i p p i n g o r
e. The supply of services by a interna>onal air transport opera>ons,
nonresident person or his including leases of property for use
employee in connec4on with the thereof;
use of property or rights belonging o Services performed by subcontractors
to, or the installa4on or opera4on and/or contractors in processing,
conver4ng, or manufacturing goods for a. Sale or importa4on of agricultural and
an enterprise whose export sales marine food products in their original state,
exceed seventy percent (70%) of total livestock, and poultry of a kind generally
annual produc>on;
used as, or yielding or producing foods for
o Transport of passengers and cargo by
air or sea vessels from the Philippines human consumpBon; and breeding stock
to a foreign country; and and geneBc materials. Even if they have
o Sale of power or fuel generated through undergone simple processes of opera4ons
renewable sources of energy such as, of prepara4on or preserva4on. Such as
but not limited to, biomass, solar, wind, freezing, drying, sal4ng, broiling, roas4ng,
hydropower, geothermal, ocean smoking, or stripping.
energy, and other emerging energy
sources using technologies such as fuel Except: Non-food agricultural products;
cells and hydrogen fuels. marine and forest products in their
original state by the primary producer
Lease of proper4es
or owner of the same land
-All forms of lease of proper4es held primarily
for lease to customers shall be subject to VAT regardless
Sale of cocon and cocon seeds
of the place where the contract of lease was executed
unless the gross annual receipts of the lessor do not in their original sale.
exceed P1,919,500.
b. Sale or importa4on of fer4lizers; seeds,
- Exempted from VAT:
o Monthly rental not exceeding P12,800 seedlings and ngerlings; sh, prawn,
per unit livestock and poultry feeds, including
o Aggregate rentals during the year do ingredients, whether locally produced or
not exceed P1,919,500, even if the imported, used in the manufacture of
monthly rental per unit exceeds nished feeds.
P12,800
- In a lease contract, the advance payment may Except: Specialty feeds for race horses,
be: gh4ng cocks, aquarium sh, zoo
(NOT SUBJECT TO VAT)
animals, and other animals, generally
a. A loan to the lessor from
the lessee considered as pets are subject to VAT.
b. Op4on money for the
property c. Importa4on of personal and household
c. Security deposit (however, eects belonging to the residents of the
if applied to rental shall be Philippines returning from abroad and non-
subject to VAT) resident ciBzens coming to reseJle in the
(SUBJECT TO VAT) Philippines.
d. Prepaid rental (taxable in
the month or quarter when Such goods are exempt from customs
received. du4es under the Tari and Customs
Code of the Philippines.

d. Importa4on of professional instruments and


VAT Exemp>ons: Sec>on 109, Tax Code of the
implements, wearing apparel, domes4c
Philippines
animals, and personal household eects
A. Exempt Persons: No provision in the VAT law belonging to persons coming to secle in the
which expressly exempts because indirect taxes Philippines, for their own use and not for
such as VAT are levied on objects or sale, barter or exchange, accompanying
transac4ons. such persons, or arriving within 90 days
before or aMer their arrival, upon the
B. Exempt Transac>ons:
produc4on of evidence sa4sfactory to the j. Services rendered by regional or area
Commissioner. headquarters established in the Philippines
by mul4na4onal corpora4ons which act as
Provided, that such persons are actually s u p e r v i s o r y, c o m m u n i c a 9 o n s a n d
coming to secle in the Philippines and coordina9ng centres for their aliates,
that the change of residence is bona subsidiaries or branchies in the Asia-Pacic
de. Region and do not earn or derive income
Except: Any vehicle, vessel, aircraq, from the Philippines.
machinery, other goods for use in the k. Transac4ons which are exempt under
manufacture and merchandise of any interna4onal agreements to which the
kind in commercial quan4ty. Philippines is a signatory or under special
laws.
e. Services subject to Percentage Tax

f. Services by agricultural contract growers Except: Those under PD No. 529


and miling for others of palay into rice, corn Petroleum Explora4on Concessionaries
into corn grits and sugar cane into raw under the Petroleum Act of 1949
sugar. l. Sales by agricultural coopera>ves duly
Agricultural contract growers refer to r e g i s t e r e d w i t h t h e C o o p e r a 4 v e
those persons producing for other Development Authority to their members as
poultry, livestock or other agricultural well as the sale of their produce, whether in
and marine food products in their its original state or processed form, to non-
original state. members; their importaBon of direct farm
inputs, machineries and equipment,
g. Medical, dental, hospital and veterinary including spare parts thereof, to be used
services. Laboratory services are also directly and exclusively in the produc>on
exempted. and/ or processing of their produce.

E x c e p t : T h o s e r e n d e r e d b y The sales can only be exempted from


professionals are subject to VAT. If the VAT if the producer of the agricultural
hospital or clinic operates a pharmacy or products sold is the coopera4ve itself.
drugstore, the sale of drugs and medicine
to out-paBents are subject to VAT. If the coopera4ve is not the producer,
then only those sales to its members shall
h. Educa4onal services rendered by private be exempted from VAT.
educa4onal ins4tu4ons duly accredited by
Example:
the DepEd, the CHEd and the TESDA and
those rendered by government educa4onal SABACO an agricultural coopera4ve duly
ins4tu4ons. r e g i s t e r e d w i t h t h e C o o p e r a 4 v e
Educa>onal services shall refer to Development Authority received dona4on
a ca d e m i c , te c h n i ca l , vo ca 9 o n a l of farm equipment from abroad. Is the
e d u c a 9 o n p r o v i d e d b y p r i v a t e importa4on of the equipment subject to
educa9onal ins9tu9ons duly accredited VAT?
by the three. N O . p r o v i d e d t h a t s u c h

i. Services rendered by individuals pursuant to equipment shall be used
an employer-employee rela4onship. directly and exclusively in the
produc4on.
m. Gross receipts from lending ac>vi>es by -real property u>lized for lowcost and
credit or mul>-purpose coopera>ves duly socialized housing as dened by Republic
r e g i s t e r e d w i t h t h e C o o p e r a 4 v e Act No. 7279, otherwise known as the
Urban Development and Housing Act of
Development Authority.
1992, and other related laws,
Example: -residen>al lot valued at One million
ve hundred thousand pesos (P1,500,000)
Bayad-Bayad Coopera4ve, a credit and below, house and lot, and other
residen4al dwellings valued at Two million
coopera4ve duly registered with the CDA, is
ve hundred thousand pesos (P2,500,000)
engaged in extending loan or credit to other and below:
person, whether members or otherwise Provided, That not later than January
who are in need of capital in their business. 31, 2009 and every three (3) years
Are the gross receipts from lending thereaqer, the amounts herein stated shall
ac4vi4es subject to VAT? be adjusted to their present values using
the Consumer Price Index, as published by
NO. The exemp>on is not only the Na4onal Sta4s4cs Oce (NSO).
limited to the gross receipts on
loans extended to its members q. Lease of a residen4al unit with a monthly
rental not exceeding Ten thousand pesos
but also to other persons who
(P10,000)
are not members. Provided. That not later than January
31, 2009 and every three (3) years
n. Sales by non-agricultural, non-electric and thereaMer, the amount herein stated shall
non-credit coopera>ves duly registered be adjusted to its present value using the
with the Coopera4ve Development Consumer Price Index as published by the
Authority. Na4onal Sta4s4cs Oce (NSO);
Provided, That the share capital r. Sale, importa>on, prin>ng or publica>on of
contribuBon of each member does not books and any newspaper, magazine,
exceed FiMeen thousand pesos (P15,000) review or bulle>n which appears at regular
and regardless of the aggregate capital and intervals with xed prices for subscrip4on
net surplus ratably distributed among the and sale and which is not devoted
members. principally to the publicaBon of paid
E x c e p t : I m p o r t a B o n b y n o n - adverBsements;
agricultural, non-electric and non-credit s. Sale, importa4on or lease of passenger or
c o o p e r a 4 v e s o f m a c h i n e r i e s a n d cargo vessels and aircraq, including engine,
equipment, including spare parts thereof, equipment and spare parts thereof for
to be used by them are subject to VAT domes4c or interna4onal transport
o. Export sales by persons who are not VAT- opera4ons;
registered t. Importa>on of fuel, goods and supplies by
Example: persons engaged in interna>onal shipping
Cyborg is a non-VAT registered taxpayer. In or air transport opera>ons;
2015, he exported commodi4es to Germany u. Services of banks, non-bank nancial
and France. Are the exporta4ons subject to intermediaries performing quasibanking
VAT? How about if he is VAT-registered? func>ons, and other non-bank nancial
The exporta9ons are exempt if intermediaries; and
he is not VAT-registered. If he is v. Sale or lease of goods or proper4es or the
registered, he shall be subject performance of services other than the
to VAT but such exporta4ons transac4ons men4oned in the preceding
are zero rated. paragraphs, the gross annual sales and/or
p. Sale of real proper4es receipts do not exceed the amount of One
-not primarily held for sale to million ve hundred thousand pesos
customers or held for lease in the ordinary (P1,500,000)
course of trade or business Provided, That not later than January
31, 2009 and every three (3) years
thereaqer, the amount herein stated shall
be adjusted to its present value using the
Consumer Price Index as published by the Transi>onal/Presump>ve Input Tax Credits: Sec>on
Na4onal Sta4s4cs Oce (NSO); 111, Tax Code of the Philippines
"(2) A VAT-registered person may
TransiBonal Input Tax Credits
- A person who becomes liable to value-added
Exemp>on of Senior Ci>zen tax or any person who elects to be a VAT-registered
person shall, subject to the ling of an inventory
Senior Ci4zen or Elderly - resident of the Philippines and according to rules and regula4ons prescribed by the
who is sixty years old or above Secretary of Finance, upon recommenda4on of the
Commissioner, be allowed input tax on his beginning
a. May apply to senior ci4zens with inventory of goods, materials and supplies equivalent
dual ciBzenship status provided to two percent (2%) of the value of such inventory or
they prove their Filipino ci4zenship the actual value-added tax paid on such goods,
and have at least six months materials and supplies, whichever is higher, which shall
be creditable against the output tax.
residency in the Philippines.

o Exempt from VAT and subject to 20% PresumpBve Input Tax Credits.
- Persons or rms engaged in the processing of
discount.
a.sardines, b.mackerel, c.milk, d. rened sugar,
e. cooking oil and f.packed noodle based
instant meals, shall be allowed a presump9ve
input tax, creditable against the output tax,
Tax Credits: Sec>on 110, Tax Code of the Philippines
equivalent to four percent (4%) of the gross
value in money of their purchases of primary
Creditable Input Tax.
agricultural products which are used as inputs
- Any input tax evidenced by a VAT invoice or
to their produc4on.
ocial receipt issued in accordance with Sec4on
As used in this Subsec4on, the term
113 hereof on the following transac4ons shall
'processing' shall mean pasteuriza9on, canning
be creditable against the output tax:
and ac9vi9es which through physical or
(a) Purchase or importa4on of goods:
chemical process alter the exterior texture or
(i) For sale; or
form or inner substance of a product in such
(ii) For conversion into or intended to
manner as to prepare it for special use to which
form part of a nished product for sale
it could not have been put in its original form or
including packaging materials; or
condi4on."
(iii) For use as supplies in the course of
business; or
(iv) For use as materials supplied in the Sale of non-food agricultural, marine and other forest
sale of service; or
products in their original state by the primary producer
(v) For use in trade or business for
which deduc4on for deprecia4on or or owner of the land
amor4za4on is allowed under this Code.
o Sale of cocon and cocon seeds in their
(b) Purchase of services on which a value-added
tax has actually been paid. original state
(2) The input tax on domes4c purchase or importa4on
of goods or proper4es by a VAT-registered person shall
o Sale of importa4on of coal and natural
be creditable: gas
(a) To the purchaser upon consumma>on of
sale and on importa4on of goods or proper4es; o Sale of importa4on of petroleum
and products, including raw materials
(b) To the importer upon payment of the value-
added tax prior to the release of the goods from o Sale by the ar4st (art, literary works,
the custody of the Bureau of Customs. musical composi4ons, or services
performed)
o Services rendered by doctors of (TIN) of the purchaser, customer or
medicine (PRC) and by lawyers client
(Integrated Bar of the Philippines)
VAT PAYABLE:
o Common carriers by air and sea rela4ve
Output Tax (sale) Pxx
o Toll road opera4ons
Less: Input tax (purchase) (xx)
o Sale of electricity by genera4on,
VAT Payable xx
t r a n s m i s s i o n a n d d i s t r i b u 4 o n
companies
1. To record cash purchases/ sales of merchandise
Sale by electric coopera4ves
A. In the books of the buyer
Invoicing and Accoun>ng Requirements for VAT Purchases xx
Registered Persons: Sec>on 113, Tax Code of the Input Tax xx
Philippines Cash xx
B. In the books of the seller
- Invoicing Requirements - A VAT-registered Cash xx
person shall issue:
Sales xx
a. A VAT invoice for every sale, barter
or exchange of goods or proper4es; Output Tax xx
and 2. To record the VAT Payable at the end of the quarter
b. A VAT ocial receipt Output Tax xx
InformaBon Contained in the VAT Invoice or Input Tax xx
VAT Ocial Receipt: VAT payable xx
a. A statement that the seller is a VAT- 3. To record payment of the VAT to the BIR
registered person
VAT Payable xx
b. taxpayer's iden>ca>on number
(TIN); Cash xx
c. The total amount which the 4. To record purchases/sales on account,
purchaser pays or is obligated to a. In the books of the seller:
pay tax with: Accounts Receivable xx
a. The amount of the tax in a Sales xx
separate item
Output Tax xx
b. If exempt, VAT-exempt sale
shall be wricen b. In the books of the buyer:
c. If zero-VAT, zero-rated sale Purchases xx
shall be wricen Input Tax xx
d. If subject to the three, the Accounts Payable xx
invoice or receipt shall 5. To record collec>on/payment of sale s/purchases on
clearly indicate which are account within the discount period
VAT, VAT-exempt and zer-
a. In the books of the seller
rated and the breakdown
d. The date of transac>on, quan>ty, Cash xx
unit cost and descrip>on of the Sales Discount xx
goods or proper>es or nature of Output Tax xx
the service Accounts Receivable xx
e. In case of sales in the amount of b. In the books of the buyer
one thousand pesos or more, where Accounts Payable xx
the sale or transfer is made to a
Purchase discount xx
VAT-registered person, the name,
business style, if any, address and Input Tax xx
taxpayer iden>ca>on number Cash xx
6. To record in the books of the buyer the payment of
freight on goods purchased on credit (FOB des>na>on,
freight collect)
Accounts Payable xx
Cash xx
7. To record in the books of the buyer the payment of
transporta>on cost of the goods purchased (FOB
shipping point, freight collect)
Freight In xx
Input Tax xx
Cash xx
8. To record return of goods purchased/sold and
receipt/ payment of cash
a. In the books of the buyer
Cash xx
Input Tax xx
Cash xx
b. In the books of the seller
Sales returns and allowances xx
Output Tax xx
Cash xx
9. To record transi>onal input tax of a new VAT-taxable
establishment
Input Tax xx
Merchandise Inventory xx
10. To record deemed sale transac>on on VAT-subject
goods for sale which were withdrawn by the owner for
his personal use
John Doe, Drawing xx
Output Tax xx
Inventory xx
11. To record presump>ve input tax on the purchase of
sugar cane by sugar renery
Raw materials xx
Input Tax xx
Cash xx
12. To record sales of merchandise during the day
which consist of VAT-subject and VAT-exempt goods
Cash
Output Tax