Bureau of Internal Revenue EVAT Slide # 1

Module Objectives

 Define Value-Added Tax

 Determine the coverage of Value-Added Tax
 Determine the basis in computing VAT on sale of
goods or properties
 Determine the basis in computing VAT on sale of
services

Bureau of Internal Revenue EVAT Slide # 2

 Module Objectives

 Determine the VAT on Importation

 Differentiate Exempt from Zero-rated transactions
 Scope of Percentage Tax
 Compliance Requirements

Bureau of Internal Revenue EVAT Slide # 3

Definition of Value-Added Tax

VAT is a tax on the seller. – Well settled is the rule that
the sales tax is not a tax on the purchaser but on the sale of
merchandise imposed on, and is due from, the seller. The
phrase “passed the tax” is inaccurate, as obviously the tax is
laid and remains on the seller on him alone. It may indeed be
that the incidence of the tax ultimately settles on the
purchaser, but it is not for that reason alone that one may
validly argue that it is a tax on the purchaser. (Atlas Consolidated mining
& Dev’t Corp vs. CIR,CTA Case No. 3022 dated Sept.30,1980)

Bureau of Internal Revenue EVAT Slide # 4

 Persons Liable to Value-Added Tax (Sec. 105 of the NIRC)
Any person who, in the course of trade or business,
sells, barters, exchanges, leases goods or properties, renders
services, and any person who imports goods shall be subject to
the value-added tax ( VAT ) imposed in Sections 106 to 108 of
the National Internal Revenue Code.

Bureau of Internal Revenue EVAT Slide # 5

Value-Added Tax on Sale of Goods or Properties

(Sec. 106 of the NIRC)
There shall be levied, assessed and collected on every
sale, barter or exchange of goods or properties, a value-added
tax equivalent to ten percent (10%) (now 12%) of the gross
selling price or gross value in money of the goods or
properties sold, bartered or exchanged, such tax to be paid by
the seller or transferor.

Bureau of Internal Revenue EVAT Slide # 6

 Value-Added Tax on Sale of Services ( Sec. 108 of the NIRC )

There shall be levied, assessed and collected a value-

added tax equivalent to ten percent (10%) (now 12%) of the
gross receipts derived from the sale or exchange of services,
including the use or lease of properties.

Bureau of Internal Revenue EVAT Slide # 7

Value-Added Tax on Importation ( Sec. 107 of the NIRC )

There shall be levied, assessed and collected on every

importation of goods a value-added tax equivalent to ten
percent (10%) (now 12%) based on the total value used by the
|Bureau of Customs in determining tariff and customs duties,
plus customs duties, excise taxes, if any, and other charges,
such tax to be paid by the importer prior to the release of such
goods from customs duties. Provided that where the customs
duties are determined on the basis of the quantity or volume
of the goods, the value-added tax shall be based on the landed
cost plus excise taxes, if any.
Bureau of Internal Revenue EVAT Slide # 8
 Exempt versus Zero-rated Transactions (RR 16-2005)

A VAT-exempt transactions refer to the sale of goods or

properties, and/or services and the use of lease of properties that is not
subject to VAT (output tax) and the seller is not allowed any tax credit
of VAT (input tax) on purchases. The person making the exempt sale of
goods, properties or services shall not bill any output tax to his
customers because the said transaction is not subject to VAT. A zero-
rated sale is a taxable transaction for VAT purposes, but shall not
result in any output tax. However, the input tax on purchases of goods,
properties, services related to such zero-rated sale, shall be available as
tax credit or refund in accordance with these Regulations.

Bureau of Internal Revenue EVAT Slide # 1

Credits for Input Tax (RR 16-2005)

Input tax means the VAT due on or paid by a VAT-registered

person on importation of goods or local purchases of goods, properties,
or services, including lease or use of properties, in the course of his
trade or business. It shall also include the transitional input tax and
the presumptive input tax determined in accordance with Sec. 111 of
the Tax Code. It includes input taxes which can be directly attributed
to transactions subject to the VAT plus a ratable portion of any input
tax which cannot be directly attributed to either the taxable or exempt
activity.

Bureau of Internal Revenue EVAT Slide # 10

 Coverage of Percentage Tax ( Sec. 116 of the NIRC )

Any person whose sales or receipts are exempt under

Section 109 (V) of this code from the payment of value-added
tax and who is not a VAT-registered shall pay a tax equivalent
to three percent (3%) of his gross quarterly sales or receipts:
Provided, that cooperatives shall be exempt from three
percent (3%) gross receipts tax herein imposed.

Bureau of Internal Revenue EVAT Slide # 10

 Return and Payment of Value-Added Tax ( RR 4-2004)

The Monthly VAT Declarations (BIR Form No.

2550M) shall be accomplished only for the first two (2) months
of each taxable quarter, and shall be filed and taxes paid not
later than the 20th day following the end of each month.

Bureau of Internal Revenue EVAT Slide # 11

Return and Payment of Value-Added Tax ( Sec. 116 of the NIRC)

Every person liable to pay the value-added tax imposed

under this Title shall file a quarterly return of the amount of
his gross sales or receipts within twenty-five (25) days
following the close of each taxable quarter prescribed for each
taxpayer: Provided, however, That VAT-registered persons
shall pay the value-added tax on a montly basis.

Bureau of Internal Revenue EVAT Slide # 12

 Staggered Filing of Returns ( RR 26-2002 )

SECTION 2. STAGGERED FILING OF RETURNS. - Section

7 of RR 9-2001as amended by RR2-2002 and RR 9-2002, is hereby
amended to read as follows:

“Section 7. TIME OF FILING OF RETURN.-For purposes of filing

returns under the EFPS, the taxpayers classified under the following
business industries shall be required to file the Monthly Withholding
Tax Returns, except withholding of Value-Added Tax; Monthly VAT
Declarations; and Monthly
Percentage Tax Returns, on or before the dates prescribed and
presented herein-below:
Bureau of Internal Revenue EVAT Slide # 12

Staggered Filing of Returns ( RR 26-2002 )

Group A 25 days following the end of the month

Group B 24 days following the end of the month
Group C 23 days following the end of the month
Group D 22 days following the end of the month
Group E 21 days following the end of the month

Bureau of Internal Revenue EVAT Slide # 13

 Return and Payment of Percentage Tax ( RR 4-2004)

The Monthly Percentage Tax Returns (BIR Form No.

2551M) shall be filed and taxes due shall be paid not later
than the 20th day following the end of each month. However,
for Percentage Tax returns/other returns required to be filed
under Sections 120,125,126 and 127 of the Tax Code, they
shall be filed within the periods stated in those sections.

Bureau of Internal Revenue EVAT Slide # 16