ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 42  October 2021 CPA Licensure Exam  Week No. 3

TAXATION A. Tamayo  G. Caiga  C. Lim  K. Manuel  E. Buen

TAX-304: VAT COMPLIANCE REQUIREMENTS

1. Invoicing Requirement, Refund of Input Taxes and Others

a. VAT Invoice and A VAT-registered person shall issue:

VAT Official a) a VAT invoice for every sale, barter, or exchange of goods or properties; and
Receipt b) a VAT official receipt for every lease of goods or properties, and for every sale,
barter or exchange of services.
b. Validity of VAT The invoice/receipt shall be valid for five (5) years from the date of the permit to
invoice and VAT use.
OR
c. Invoicing The following information shall be indicated in VAT invoice or VAT official
Requirement receipt:
a) A statement that the seller is VAT-registered person followed by TIN;
b) The total amount to be paid with the indication that such amount includes
the VAT:
1) Amount of tax shall be shown as a separate item in the invoice or receipt;
2) “VAT-exempt sale”, if the sale is exempt;
3) “Zero-rated sale”, if the sale is subject to zero percent VAT;
4) If mixed sales, breakdown of the sales price between its taxable, exempt
and zero-rated components and the calculation of the VAT on each portion.
Separate invoices or receipts may be issued for each type of sales.
c) The name, business style, if any, address and TIN of the customer, in case the
sales amount to P1,000 or more.

Exercise: Indicate what invoice or official receipt shall be issued by the following assuming VAT
threshold amount is exceeded
1) Office supplies trader
2) Warehousing services
3) Beauty parlor
4) Mango farm owner
5) Trucking business
6) Fuel or power supplier generated from renewable sources of energy
7) Movie theatre owner
8) Professional basketball player in the Philippine Basketball Association (PBA)
9) Contract artists of television companies
10) Fresh fish dealer

2. Invoicing and Recording Deemed Sale Transactions

Deemed Transaction Invoicing and Recording

a. Transfer, use or
consumption not in the
course of trade or
business;
b. Distribution or transfer to
shareholders or investors
or to creditor in payment
of debt or obligation;
c. Consignment of goods if
not sold within 60 days
following the date of
consignment;
d. Retirement from or
cessation of business
Memorandum entry
Invoice shall be prepared at the time of the occurrence of the transaction and
shall be duly recorded in the subsidiary sales journal. The total amount of
“deemed sale” shall be included in the return to be filed for the month or
quarter.
Same as in 2) above
An inventory shall be prepared and submitted to the RDO having jurisdiction
over the taxpayer’s principal place of business not later than 30 days after
retirement or cessation from business.

3. VAT Returns and Payment of Value-Added Tax

a. Monthly VAT Declaration and Payment of VAT
1) Filing of the declaration Not later than 20th day following the end of the first two (2) months in a
and payment of value- quarter
added tax
2) Taxpayers enrolled with Group A – 25 days following the end of the month
Electronic Filing and B – 24 days following the end of the month
Payment System (EFPS) C – 23 days following the end of the month
D – 22 days following the end of the month
E – 21 days following the end of the month

Page 1 of 4 0915-2303213  www.resacpareview.com

ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY TAX-303
Week 3: VAT COMPLIANCE REQUIREMENTS

b. Filing of Quarterly VAT Return and Payment of VAT

1) Filing of quarterly return Every person liable to pay the value-added tax imposed under this Title shall
and payment of value- file a quarterly return of the amount of his gross sales or receipts within
added tax twenty-five (25) days following the close of each taxable quarter prescribed
for each taxpayer.

VAT-registered persons shall pay the value-added tax on a monthly basis.

Monthly VAT declarations shall remain until December 31, 2022.

2) Meaning of taxable
quarter
3) Quarterly return includes
the amounts reflected in
the monthly VAT
declarations
4) Monthly payments to be
credited in the quarterly
VAT return
5) Deductions from the
quarterly VAT payable
(excess input tax)
Beginning January 1, 2023, the filing and payment required shall be done
within twenty-five (25) days following the close of the taxable year.
The term “taxable quarter” shall mean the quarter that is synchronized to the
income tax quarter of the taxpayer (i.e. calendar quarter or fiscal quarter.)
Amounts reflected in the monthly VAT declarations for the first two (2) months
of the quarter shall still be included in the quarterly VAT return, which reflects
the cumulative figures for the taxable quarter.
Payments in the monthly VAT declarations shall be credited in the quarterly
VAT return to arrive at the net VAT payable, or excess input tax/overpayment
as of the end of the quarter.
The VAT payable/Excess Input tax for each taxable quarter shall be reduced
by the total amount of taxes previously paid for the immediately preceding
two (2) months, and the advance payments/creditable VAT withheld by the
payors for the three months of the quarter.

c. Exercise: The following data for the current year are presented to you:
Output tax Input tax
January P100,000 P 80,000
February 120,000 110,000
March 80,000 120,000
April 150,000 100,000
May 90,000 50,000
June 110,000 60,000

Compute the VAT payable on the monthly declarations and quarterly return (See answers on the last part of the
handouts)

d. Substituted VAT Return

1) Substituted VAT 1) In case of sale of goods or services by persons subject to 12% VAT, whose gross
Return (Payee with sales or receipts have already been subjected to 12% VAT by the lone payor, the
Lone Payor) payee (seller) shall no longer be required to file the monthly VAT declaration and the
quarterly returns.
2) The Monthly Remittance Return of VAT Withheld duly filed by the withholding agent-
payor serves as the substituted return of the payee (seller) with lone payor.
2) Payee with Several Payees with several payors are still required to file the regular VAT return reflecting
Payors the consolidated total of all taxable transactions for the taxable period and applying
as tax credits the taxes withheld by several payors.

e. Substituted Official Receipts

Sellers who are Sellers of services whose gross receipts have been subjected to 12% final VAT shall
exempt from issuing be exempt from the obligation of issuing duly registered VAT official receipts covering
Official Receipts their receipts for services sold.

f. Short Period Return

1) Final return of a Any person who retires from business with due notice to the BIR office where the
person who retires taxpayer (head office) is registered and whose VAT registration has been cancelled
from business shall file a final quarterly return and pay the tax due thereon within twenty-five (25)
days from the end of the month when the business ceases to operate or when the VAT
registration has been officially cancelled.
2) Subsequent Subsequent monthly declarations/quarterly returns are still required to be filed if the
monthly results of the winding up of the affairs/business of the taxpayer reveal taxable
declarations/ transactions.
quarterly returns to
be filed after
retirement
3) Effective date of All persons first registered shall be liable to VAT on the effective date of registration
VAT registration stated in their Certificates of Registration (i.e., the first day of the month following
their registration.)
4) Initial monthly VAT 1) If the effective date of registration falls on the first or second month of the taxable
quarter, the initial monthly VAT declaration shall be filed within twenty (20) days

Page 2 of 4 0915-2303213  www.resacpareview.com

ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY TAX-303
Week 3: VAT COMPLIANCE REQUIREMENTS

declaration or after the end of the month, and the initial quarterly return shall be filed on or before
quarterly VAT return the 25th day after the end of the taxable quarter.
2) If the effective date of registration falls on the third month of the taxable quarter,
the quarterly return shall be filed on or before the 25 th day of the month following
the end of the taxable quarter, and no monthly VAT declaration need be filed for
the initial quarter.

g. Payment of VAT on Importation

The VAT on importation shall be paid by the importer prior to the release of such goods from customs custody.

4. Where to File and Pay VAT

a. Where to file The monthly VAT declaration and quarterly returns shall be filed with:
monthly VAT 1) Bank duly accredited by the Commissioner of Internal Revenue located in the
declaration and revenue district office where such taxpayer (head office of the business
quarterly VAT establishment) is required to register.
return if payment 2) In the absence of accredited bank, the monthly VAT declaration and quarterly return
is involved shall be filed with Revenue District Officer, Collection Agent, duly authorized
Treasurer of the Municipality/City where such taxpayer (head office of the business
establishment) is required to be registered.
b. Where to file The monthly VAT declaration and the quarterly VAT return, where no payment is
monthly VAT involved, shall be filed with:
declaration and a) Revenue District Officer/Large Taxpayer District Office/Large Taxpayer
quarterly VAT Assistance Division;
return if no b) Collection Agent;
payment is c) Duly authorized Municipal/City Treasurer of the Municipality or City where the
involved taxpayer (head office of the business establishment) is registered or required to
be registered.
c. Consolidated Only one consolidated quarterly VAT return or monthly VAT declaration covering the
monthly results of operations of the head office as well as the branches for all lines of business
declaration and subject to VAT shall be filed by the taxpayer, for every return period, with the BIR
quarterly return office where the taxpayer is required to be registered.

5. Submission of Quarterly Summary Lists of Sales/Purchases

a. Persons required to 1) Persons required to submit summary lists of sales. – All persons liable to VAT
submit summary such as manufacturers, wholesalers, service-providers, among others. (RR No. 1-
list of sales or 2012 deleted the requirement of having quarterly total sales/receipts, net of VAT,
purchases exceeding P2,500,000.)
2) Persons required to submit summary lists of purchases. – All persons liable
to VAT such as manufacturers, wholesalers, service-providers, among others. (RR
No. 1-2012 deleted the requirement of having quarterly total purchases, net of VAT,
exceeding P1,000,000).
b. Where to File the The quarterly summary list of all sales or purchases, whichever is applicable, shall be
Summary Lists of submitted to the RDO, LTDO or LTAD having jurisdiction over the taxpayer.
Sales or Purchases
c. When to Submit the The quarterly summary list shall be submitted, on or before the 25th day of the month
Summary Lists of following the close of the taxable quarter (VAT quarter) – calendar quarter or fiscal
Sales or Purchases quarter.
d. Submission of For taxpayers authorized to use computerized accounting system, the above list shall
Summary Lists of be submitted through Compact-Disk Recordable (CDR) medium.
Sales or Purchases

6. Power of the Commissioner to Suspend Business Operations

Power of the The Commissioner of Internal Revenue or his authorized representative may order
Commissioner to suspension or closure of a business establishment for a period of not less than 5 days for
Suspend any of the following violations:
Business a) Failure to issue receipts or invoices;
Operations b) Failure to file VAT return;
c) Understatement of taxable sales or receipts by 30% or more of the correct taxable
sales or receipts for the taxable quarter;
d) Failure of any person to register as required under the law.

7. Mandatory Registration under the VAT System

Persons required Any person who, in the course of trade or business, sells, barters or exchanges goods or
to mandatorily properties or engages in the sale or exchange of services shall be liable to register if:
register (a) His gross sales or receipts for the past twelve (12) months, other than those that are
exempt under Section 109(A) to (BB), have exceeded P3,000,000; or
“(b) There are reasonable grounds to believe that his gross sales or receipts for the next
twelve (12) months, other than those that are exempt under Section 109(A) to (BB),
will exceed P3,000,000.

Page 3 of 4 0915-2303213  www.resacpareview.com

ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY TAX-303
Week 3: VAT COMPLIANCE REQUIREMENTS

8. Optional Registration of VAT-Exempt Persons

a. Persons (1) Any person who is not required to register for value-added tax may elect to register for
allowed value-added tax by registering with the Revenue District Office that has jurisdiction over
optional VAT the head office of that person, and paying the annual registration fee P500 for every
registration separate or distinct establishment or place of business, including facility types where sales
transactions occur, shall be paid upon registration and every year thereafter on or before
the last day of January.

Cooperatives, individuals earning purely compensation income, whether locally or abroad,

and overseas workers are not liable to the registration fee herein imposed.

(2) Any person who elects to register optionally shall not be entitled to cancel his registration
for the next three (3) years.
(3) Any person who elected to pay the eight percent (8%) tax on gross sales or receipts shall
not be allowed to avail of this option.
(4) For purposes of Value-Added Tax, any person who has registered value-added tax as a
tax type shall be referred to as a ‘VAT-registered person’ who shall be assigned only one
Taxpayer Identification Number (TIN).

END

Answers to Selected Items

January: Output tax P100,000

Less: Input tax 80,000
VAT Payable P 20,000
Due date February 20

February: Output tax P120,000

Less: Input tax 110,000
VAT Payable P 10,000
Due date March 20

March: Output tax (100,000 + 120,000 + 80,000) P300,000

Less: Input tax (80,000 + 110,000 + 120,000) 310,000
Excess input tax ( 10,000)
Less: Monthly VAT payments (20,000 + 10,000) ( 30,000)
Excess input tax (overpayment) (P40,000)
Due date April 25

April: Output tax P150,000

Less: Input tax 100,000
VAT Payable P 50,000
Due date May 20

May: Output tax P90,000

Less: Input tax 50,000
VAT Payable P40,000
Due date June 20

June: Output tax (150,000 + 90,000 + 110,000) P350,000

Less: Input taxes
Carried over from previous quarter 40,000
Current transactions (100,000 + 50,000 + 60,000) 210,000 250,000
VAT payable 100,000
Less: Monthly VAT payments (50,000 + 40,000) 90,000
Tax payable P 10,000
Due date July 25

Page 4 of 4 0915-2303213  www.resacpareview.com