VAT on Properties and Goods
- Personal use of inventory by VAT registered-
transaction deemed sales
- Capital assets- not subject to VAT
- Ordinary Assets- exempt from VAT if 1919500 &
below
- House & lot- 3199200 and below are exempted
- Basis for TDS is selling price and acquisition
cost- whichever is LOWER
- When inventory is used to settle obligation, the
basis of VAT is the amount of debt collected
- Change of ownership=retirement from business
- Business assets OTHER than inventory left upon
retirement=NOT TDS
- Incorporation of single proprietorship= TDS
- Inventory used for promotion = operating
expense (NO VAT)
- Merger and consolidation= NOT TDS
- Installment basis if IP is 25% or less of GSP
- GSP is highest amount among the zonal, tax
dec, agreed consideration
- FMV>Selling price = FMV is VAT EXCLUSIVE
- Interest and surcharges on IP are subject to VAT
- Alamang = original state
- Unreasonable gross selling price= lower than
30% of actual market value
- Use of supplies is not subject to VAT BUT the
related input VAT is DEDUCTIBLE against output
VAT
- Custom duties and community tax of the
importer is not included as part or the taxable
base of imported goods
- NOT all sales of VAT-registered person,
domestic and export are subject to 12% output
VAT
- Importation of goods by a non-vat person for
personal use is subject to 12% VAT
- Deemed sales VAT taxable transx are NOT taxed
at 12% of market value of such goods as of the
occurrence of transx
- When GSP is unreasonable, Commissioner will
determine the appropriate tax base
- Family home & personal car are NOT subject to
VAT
- NO VAT for sales outside
- Sale of marine food products in original state is
still VAT exempt even if the entity is actually
engaged in marine food product business
- Person responsible to pay the VAT is the BUYER
- Incorporation of single proprietorship: other
assets aside from inventory are also VATABLE
- Transfers of assets of merger and consolidation
= transfer in forms and NOT in substance
- GSP>FMV = GSP is VAT INCLUSIVE
*see rules for low-cost and socialized housing
VAT on Sale of Services
- Payment to acquire Jollibee franchise is a sale of
service subject to VAT
- Receivables in service is NOT subject to VAT
- Gross receipts of a dealer in securities means
gross selling price less securities sold
- Lawyer’s fee and medical doctor’s fee may be
subject to VAT
- Consent of the depositor-buyer restricts the
withdrawal; therefore there is no constructive
receipt if amount is transferred in the name of
the seller
- ………..
Input VAT Credits and Refunds
- Deductions for input VAT require
documentation of VAT sales invoice or VAT
official receipt
- Trnsactions made w/ non-VAT and VAT exempt
persons are not subject to INPUT VAT
- Resident lessee or licensee must be the one to
file the VAT return in the name of nonresident
foreign entity
- Other charges prior to release of goods from
the Bureau of Custom may be included as part
of the amount subject to VAT
- Input VAT of a VAT person for PERSONAL use is
NOT creditable against output VAT
- TIV is granted only once when a non-VAT
taxpayer shifts to VAT
- PIV is intended only for purchase of primary raw
materials used in the processing of sardines,
mackerel, milk, refined sugar, cooking oil,
packed noodles based instant meals
- For real property bought on installment, the
creditable input VAT to the BUYER should
correspond to the VAT of the installment
payments
- Input VAT is NOT recognized from effectiveky
zero-rated purchases
 - VAT refund should be filed and applied w/in 2
years from filing of VAT return
- TIV and PIV are NOT allowed for tax refund or
issuance of TCC
- Purchases of VAT-registered business used for
business operation is NOT taxable w/ 12% VAT?
- VAT registered buyers of non-VAT business that
collects that collects VAT is allowed to deduct
input VAT
- X enterprises, a VAT registered business: Only
VAT invoice (represents purchase; receipts for
sales) in the name of X can be subjected to
creditable input VAT
- Standard input VAT on sales to gov’t (7%)
- Input VAT from purchases is deducted by
proportionate input VAT for sales to Gov’t
- Store rent paid to VAT-exempt persons = not
subject to creditable input VAT
- Basis of presumptive input VAT is the gross
value of the purchased raw materials USED in
production

Mixed Business Transactions

- Untraceable input VAT shall be allocated
proportionately on the basis of SALES volume
- The actual input VAT related to sales for the
gov’t is not allowed to be deducted from output
VAT on sales not made for the gov’t
- Transport of passengers or cargoes outside the
Phil by a domestic transport corp are zero-rated
transaction
- VAT withheld by the gov’t for its payment to the
goods and services of a VAT person is a final tax
- Sales to ECOZONE enterprise are zero-rated
transactions
- More advantageous if the input VAT traced to
VAT-exempt sales is treated as addition to cost
of sales
- If the input VAT cannot be directly traced to
VAT, zero-VAT and VAT exempt transx, only VAT
transx is allowed as deduction from output VAT
- The amount of insurance premium is not
subject to 12% VAT if the object of insurance is
a NATURAL person

DONOR’S TAX
- 2nd cousin= stranger
-