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Chapter 10 Determination of Vat Still Due
Chapter 10 Determination of Vat Still Due
Chapter 10 Determination of Vat Still Due
DETERMINATION OF
VAT STILL DUE
Prepared by: Carl Justine T. Maniago, CPA
DETERMINATION OF VAT STILL DUE
Tax Credits/Payments
VAT paid in the previous two months – for quarterly VAT returns
VAT paid in return previously filed, in the case of amended return
Advanced payments made to the BIR
Final withholding VAT on sales to the government
Advanced VAT on certain goods
ADVANCED VAT
The owners or sellers of the following goods are required to pay advanced
VAT before their withdrawal at the point of production:
Refined Sugar
Flour
Naturally grown and planted timber products
Advanced VAT is not an input VAT and not included as part of the
allowable input VAT. However, unutilized advanced VAT in the period may
form part of the Input VAT Carry-Over.
ADVANCED VAT:
SALE OF SUGAR
Sugar – refers to sugar other than raw cane sugar or those with sugar
content of sucrose by weight, in the dry state corresponds to a polarimeter
reading to 99.5 degrees and above and whose color is 800 ICU or less.
Before any warehouse receipts or quedans are issued or before the sugar is
withdrawn from the sugar mill/refinery, the advanced VAT shall be paid by
the owner/seller to the BIR.
Sugar owners refer to persons who have legal title over the sugar and may
include sugar planters, traders, sugar millers, cooperatives, or association.
The advanced input VAT to be paid prior to the withdrawal of sugar from refinery:
Advanced VAT = 4,000 bags x P1,400 x 12% = P 672,000
Assuming Sugarco was able to sell 3,800 bags at P1,800/bag during the month,
compute the VAT payable.
ADVANCED VAT:
SALE OF SUGAR
ILLUSTRATION:
For wheat purchased by flour millers from wheat traders – 75% of the sum of:
Invoice value (a)
Estimated freight (b), and
5% of the sum of (a) and (b)
ADVANCED VAT:
SALE OF FLOUR BY MILLERS
ILLUSTRATION:
A VAT-registered flour miller imported a 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 $1.00. Compute the advanced input VAT.
ILLUSTRATION:
Forester Isidro 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. Compute the advanced VAT.
Advanced VAT payment which remained unutilized at the end of the taxpayer’s
taxable year when advanced payment was made, and which is tantamount to
excess payment may, at the option of the owner/seller/taxpayer or
importer/miller/taxpayer, be available for the issuance of a tax credit certificate
(TCC).
ILLUSTRATION 1:
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
ILLUSTRATION 2:
A VAT-registered taxpayer had the following sales and purchases during a month.
Compute the VAT payable.
ILLUSTRATION 2:
Invoicing requirement
Accounting requirement
Filing of VAT return
Filing of quarterly summary lists
Government withholding
COMPLIANCE REQUIREMENTS:
INVOICING REQUIREMENT
A VAT-registered person shall issue a:
VAT invoice for every sale, barter or exchange of goods or properties; and
VAT official receipt for every lease of goods or properties, and for every sale, barter or
exchange of services.
A VAT taxpayer may use a single invoice or receipt for mixed sales, provided
the invoice/receipt must clearly indicate the breakdown of the sales/receipt among
taxable, exempt and zero-rated components; and
the calculation of VAT on each portion of the sale shall be shown on the invoice/receipt.
A VAT-registered taxpayer may also use different invoice/receipt for the taxable, exempt,
and zero-rated components of its sales. Provided that:
if the sale is exempt from VAT, the term VAT-EXEMPT SALE shall be written or printed
prominently on the invoice/receipt
if the sale is subject to zero percent VAT, the term ZERO-RATED SALE shall be written
prominently on the invoice or receipt.
COMPLIANCE REQUIREMENTS:
ACCOUNTING REQUIREMENT
The daily transactions of the business are recorded on the subsidiary records.
COMPLIANCE REQUIREMENTS:
FILING OF VAT RETURN
Who are required to file VAT returns?
Any person or entity who, in the course of his trade or business, sells, barters,
exchanges, leases goods or properties, and renders services subject to VAT, if the
aggregate amount of actual gross sales/receipts exceeds P3,000,000.
A person required to register as a VAT taxpayer but failed to register.
Any person who imports goods, whether or not made in the course of his trade or
business.
The following are the order of priority where to file the VAT return:
Authorized agent bank under the jurisdiction of the RDO/LTO where the taxpayer
(head office of business establishment) is required to be registered
Revenue collection officer
Duly authorized treasurer of the municipality or city
COMPLIANCE REQUIREMENTS:
FILING OF QUARTERLY SUMMARY LISTS
The legal requirement for the final withholding of VAT shall apply if the
goods or services purchased from VAT suppliers were vatable.