The VAT Threshold

- Franchisees of TV or radio – P10M sales or receipt during a year (special threshold)

- All other businesses – P1,919,500 sales or receipts in any 12-month period (general threshold)
- NOTE: For purposes of the VAT threshold, only vatable sales/receipts are considered (i.e. sales or receipts other
than from A/M HERE RICS QT and BICAP FLOWS)

Services subject to Percentage Taxes (BICAP FLOW)

- Banks
- International carriers
- Common carriers
- Certain Amusement places
- PSE sales
- Franchise
- Life Insurance
- Overseas communication
- Winnings

The Value Added Tax

Topic Outline:
- Sources of Output VAT
- Sources of Input VAT
- Determination of VAT payable

Sources of Output VAT

● Regular Output VAT – 12%
- Sale of goods
- Sale of services
- Sale of real properties
- Transactions deemed sales
● Zero-rated VAT – 0%

List of transactions deemed sales

● Consignment if not withdrawn in 60 days
● Usage not in the course of business
- Withdrawal of goods for personal use
- Dacion en pago
- Property dividend
● Retirement from or cessation of business
● Change of status as VAT taxpayer to a non-VAT taxpayer

Basis and Timing of Recognition: Output VAT

Basis Timing

Sales of goods Selling price Month of sale

Sales of services Gross receipts Month of collection

Sale of real properties Gross selling price (SP or FMV w/e is Month of sale amortized
higher)

Transaction deemed sales Fair market value Month of deemed sales

Input VAT
● Input VAT
- the VAT paid on purchases including incentives allowed by the law as credit against Output VAT
● Not all input VAT payments are creditable