DETERMINATION OF VAT STILL DUE/PAYABLE

Output VAT xx
Less: Creditable Input VAT xx
Net VAT payable xx
Less: Tax credits/payments xx
Tax still due/(overpayment) xx

Tax Credits/Payments
1. VAT paid in the previous two months-for quarterly VAT returns
2. VAT paid in return previously filed, in the case of amended return
3. Advanced payments made to the BIR.
4. Final withholding VAT on sales to the government
5. Advanced VAT on certain goods

VAT Payments in the Monthly Returns

This tax credit applies to the quarterly VAT return. (BIR Form 2550Q). This is not applicable to the monthly VAT
return (BIR Form 2550M).

Advanced VAT
The owners or sellers of the following goods are required to pay advanced VAT before their withdrawal at the point
of production:
1. Refined sugar
2. Flour
3. Naturally grown and planted timber products

-advanced VAT is not an input VAT. However, unutilized advanced VAT in the period may form part of the Input
VAT carry-over if opted by the taxpayer.

Advanced VAT on the Sale of Sugar

Sugar owners refers to a person who has legal title over the sugar and may include sugar planters, traders, sugar
millers, cooperatives or associations.

Base price of advanced VAT: P1,400 per 50 kg. bag

Illustration 1
Mayumu Company buys sugar cane from farmers, processes it in its refinery and sells the output to wholesalers.
The following relates to its processing and refining activities during a month:

Purchase of cane sugar from cane farmers P2,000,000

Refining expenses, including P24,000 VAT 324,000
Total production of 50 kg-bag refined sugar 4,000 bags

The advanced input VAT to be paid prior to the withdrawal of the sugar from the refinery shall be:

Advanced VAT= 4,000 bags x P1,400 x 12% P672,000

Assuming Mayumu was able to sell 3,800 bags at P1,800/bag during the month, the VAT payable shall be
computed as:

Output VAT (3,800 bags x P1,800 x 12%) P820,800

Less: Input VAT
Presumptive input VAT (2M x 4%) P80,000
Regular input VAT 24,000 104,000
VAT payable 716,800
Less: Tax credits/payments
Advanced input VAT 672,000
Tax still payable/overpayment 44,800

Advanced VAT on the Sale of Flour by Millers

Flour millers is a person who is engaged in the milling of imported wheat to produce flour as finished product,
where such wheat may be directly imported or purchased from an importer/trader.

Wheat trader is a person who is engaged in the importing/buying and selling of imported wheat.

Basis of the advanced VAT

For wheat imported by millers-75% of the sum of:
a. Invoice value x currency exchange rate at the date of payment
b. Custom’s charges
c. And 5% of the sum of a and b

For wheat purchased by millers from wheat traders-75% of the sum of:
a. Invoice value
b. Estimated freight
c. And 5% of the sum of a and b

Illustration:
A VAT-registered flour miller imported wheat from abroad at a total invoice price of $100,000. P300,000 total
charges was estimated to be paid prior to the release of the wheat from Customs. The Peso-Dollar exchange rate
at the date of payment was P43.50 to $1.

The advanced input VAT shall be computed as:

Invoice price ($100,000 x P43.50) P4,350,000

Estimated custom's charges 300,000
Landed cost 4,650,000
Multiply b 105%
Total 4,882,500

Total 4,882,500
Multiply by: 75%
Advanced VAT base 3,661,875
Multiply by: 12%
Advanced VAT 439,425

• The payment order, together with the deposit slip issued by the authorized agent bank or the ROR issued
by the Revenue Collection officer, shall serve as proof for such advanced payment for purposes of
claiming input VAT.

Advanced VAT on the Transport of Naturally Grown and Planted Timber Products

Basis of advanced VAT

The 12% advanced VAT shall be based on per cubic meter (m3) of each species of naturally grown timber as
follows:
 Luzon Visayas Mindanao
(Peso/m3) (Peso/m3) (Peso/m3)

Phil mahogany group, Manggasinor group, Manggachapui group, Narig

group, Palosapis group, Guijo group 1,400 1,400 1,425
Yakal Group 1,500 1,500 1,530
Apitong Group 1,260 1,260 1,260
Softwood Species except Igem 715 715 715
Igem 1,275 1,275 1,275
Nato 1,000 1,000 1,000
Furniture/construction hardwood 950 950 950
Premium species, allowed cut 3,000 3,000 3,000
Lesser-used 700 700 700
Pulpwood, chipwood and mathwood species (per m3) 95 95 95

Illustration:
Forester Isidoro is a VAT registered person and a licensee under a Private Forest Development Agreement with
the government in Kalinga Province in Luzon. He harvested 1,700 cubic meter of mahogany.

Forster Isidoro shall pay the following advanced VAT on the timber prior to the transport of the same:

Advanced VAT= 1,700 m3 x P1,400/ m3 x 12% P285,600

Unutilized Advanced VAT

At the option of the owner/seller/taxpayer or importer/miller/taxpayer be available for the issuance of a tax credit
certificate (TCC).

Requisite for TCC claim

1. The seller/owner or importer/miller must file a claim for credit within 2 years from the date of filing of the
fourth quarter VAT return of the year return was made.
2. Claim shall be limited to the unutilized VAT payment and shall not include excess input VAT.

When Input VAT may be claimed for refund

1. Unutilized input VAT on zero-rated sales
2. Unutilized input VAT upon cancellation of VAT registration due to retirement from or cessation of business.

When and where to claim for VAT refund or TCC for zero-rated sales (within 2 years)
1. BIR
2. BOI
3. One stop shop and Duty Drawback Center of the Department of Finance

Illustration-VAT PAYABLE COMPUTATION

Illustration 1
Denver Company had the following transactions, net of VAT, in the first quarter of 2020:

January February March

Sales 1,000,000 1,200,000 1,400,000
Purchases
Goods and services 1,100,000 700,000 900,000
Building (3 year life) 2,400,000
 The VAT payable shall be computed in the VAT return as:

January February March

Output VAT 120,000 144,000 432,000
Less: Input VAT
Input VAT carry-over 20,000
Goods/services 132,000 84,000 324,000
Building 8,000 8,000 24,000
Net VAT payable (20,000) 32,000 84,000
Less: Tax credit/payments
VAT paid-prior months 32,000
VAT due and payable (20,000) 32,000 52,000

Illustration 2
BYAHE Bus Lines is a VAT-registered operator of several buses. During the month, it had the following receipts
and payments:

Receipts from passengers 700,000

Receipts from baggage, cargoes, and mails 100,000
Purchase of diesel, inclusive of VAT 448,000
Bus maintenance and insurance, inclusive of VAT 134,400
Salaries and commission of staff 150,000
Life insurance of drivers 20,000
Office supplies, utilities and rental, inclusive of VAT 100,800

The total input VAT shall first be determined from the vatable purchases:
Purchase of diesel, inclusive of VAT 448,000
Bus maintenance and insurance, inclusive of VAT 134,400
Office supplies, utilities and rental, inclusive of VAT 100,800
Total purchases with VAT 683,200
Multiply by: x 12/112
Total input VAT 73,200

The creditable input VAT shall be:

P73,200 x P100,000/P800,000 9,150

The VAT payable shall be computed as follows:

Output VAT (100K x 12%) 12,000
Less: Creditable input VAT 9,150
Net VAT payable 2,850

Illustration 3
A VAT taxpayer using the cash basis presented the following data during the month:

Professional fees billed, VAT-inclusive 896,000

Professional fees collected, VAT-inclusive 784,000
Client advances, VAT-exclusive 200,000
Salaries expense 300,000
Depreciation expense 50,000
Supplies expense, inclusive of VAT 33,600

During the month, an equipment with 8 year estimated useful life was purchased. An input VAT of P144,000 was
paid on the purchase.

The gross receipt and output VAT shall be computed as:

Professional fees collected (784,000/112) 700,000
Client advances 200,000
Gross receipt 900,000
Multiply by: 12%
Output VAT 108,000

The creditable input VAT shall be computed as:

Input VAT on equipment (144k/60mos.) 2,400

Input VAT on supplies (33.6k x 12/112) 3,600
Total 6,000

The VAT payable shall be:

Output VAT 108,000

Less: Input VAT 6,000
Net VAT payable 102,000

Illustration 4
Danube Corporation reported the following sales and purchases during the third calendar quarter:
July August September
Sales 1,100,000 1,340,100 1,240,000
Unsold consignment sales from:
May 64,800 12,800
June 86,200 37,500 -
July 122,800 80,400 48,000
August 150,000 90,000
Purchases:
Goods from VAT suppliers 896,000 1,008,000 784,000
Machineries from non-VAT suppliers 1,232,000

Additional information:
1. The reported sales include direct sales and those made by consignees but excludes sales of goods previously
deemed sold.
2. All amounts are inclusive of VAT.

The VAT payable in each month may be computed as:

July August September

Vatable sales
Direct sales 1,100,000 1,340,100 3,680,100
Deemed sales (60-day old) 64,800 37,500 150,300
Total 1,164,800 1,377,600 3,830,400
 Multiply by: 12/112 12/112 12/112
Output VAT 124,800 147,600 410,400
Less:
Vatable purchase 896,000 1,008,000 2,688,000
Multiply by: 12/112 12/112 12/112
Input VAT 96,000 108,000 288,000
VAT paid in prior months 68,400
Total 96,000 108,000 356,400
VAT due and payable 28,800 39,600 54,000

Illustration 5
Nasam-it Sugar Company produces refined sugar. It had the following transactions during the month:

Total production (50-kg bag) 2,000 bags

Total bags exported at $55/bag 400 bags
Total bags sold to local buyers at P2,000/bag 1,600 bags
Purchase of sugar cane P1,200,000
Purchase of other supplies (VAT inclusive) 224,000
Electricity bill (VAT inclusive) 44,800

The current exchange rate is P42.50: $1

The advanced VAT to be paid shall be computed as follows:

Presumptive input VAT (P1.2m x 4%) 48,000
Advanced input VAT 336,000
Regular input VAT
Electricity bill (P224,000x 12/112) 24,000
Other supplies (44,800 x 12/112) 4,800
Total creditable input VAT 412,800

The VAT payable shall be:

Output VAT (1,600 bags x P2,000 x 12%) 384,000
Less: Creditable input VAT 412,800
Net VAT payable (28,800)

Note:
1. There is no need to allocate the P412,800 total creditable input VAT in this case because there are only two types of vatable sales and export
sales. Note that any input VAT allocable to export sales would still be creditable against output VAT.
2. Allocation is necessary if the taxpayer intends to claim the input VAT traceable to export sale as tax refund or tax credit.

Compliance Requirement
1. Invoicing requirement
-Vat invoice/receipt
-separate single/mixed invoice or receipt

2. Accounting requirement
All persons subject to VAT shall maintain
1. Regular accounting records
2. Subsidiary sales journal
3. Subsidiary purchase journal

3. Filing of VAT return

Where to file the VAT return?
1. Authorized agent bank under the jurisdiction of the RDO/LTO
 2. Revenue Collection officer
3. Duly authorized treasurer of the municipality or city

Manual filing (20/20/25)

Electronic Filing and Payment System (eFPS)
Monthly Filing (Group A, B, C, D, E) / 25/24/23/22/21 days following the end of the month

4. Filing of quarterly summary lists

Quarterly summary lists to be submitted by all VAT taxpayers

1. Sales to regular buyers or customers (6 times), casual buyers or customers (individual purchase 100k or
more) and output tax.
2. Local purchases and input tax
3. Importation

A taxpayer’s quarterly sales and purchases are submitted to the BIR’s website through RELIEF Data Entry System.
These shall be submitted by the taxpayer before the 25th day of the month following the close of the taxable year.

5. Government withholding