INPUT VAT

Proper claiming of input VAT Requisites (TRIAD)

1. transaction - purchase/importation transaction
2. registration - buyer must be VAT-registered person
3. in the course of business
4. attribution - allocate the IT to the VAT-subject and -exempt transactions (directly
attibuted or ratable portion only can be claimed as input tax credit)
5. documentation
> registration
input tax credit shall be creditable
➡ ️ upon pmt of VAT prior to the release of goods from the customs custody
(importer)
➡ ️ upon consummation of sale (purchaser of domestic goods or properties)
➡ ️ upon pmt of the compensation, rental, royalty, or fee (purchaser of service or
the lesee or licensee)
✅sales invoice (goods)
✅official receipt (services)
✅import entry or other equivalent docs showing actual pmt of VAT (importation of
goods)
✅public ins. + VAT invoice issued by the seller (purchase of RP)
❌supplementary invoice not valid to claim input tax credit

Special rules on input VAT
Input VAT on capital goods (depreciable asset)
Requisites:
❗aggregate AC, excluding VAT, exceeds 1M
❗per month basis
amortize evenly (UL or 60 mos, shorter)

Input VAT on vehicles

❗only 1 vehicle for land transport is allowed for use of an employee
❗must not exceed 2.4M

xpn: main line of biz is transport/lease of transpo. eqpt + vehicles purchased are used
in said operations, purchasers can still claim input VAT even if it exceeds the threshold
❗dep exp exceeding 2.4m cannot be claimed as a deduction from gross income
❗maintenance and repairs exp on a vehicle exceeding 2.4m cannot be claimed as a
deduction from GI

Contruction in progress
- considered a purchase of service, based on progress billings

Special forms of input VAT Transitional input VAT (from non-VAT to VAT)
transitional Who is liable?
presumptive ✅those liable to VAT or who elects to be a VAT-reg person
standard
withholding Computation:
Higher of
a. 2% of the BI (whether non-VAT or taxable invty) and
b. Actual VAT paid on such goods, mats, ro supplies

Presumptive Input VAT

Who is liable?
✅persons or firms engaged in the processing or manufacturing of: (SA MAMI KO
PARE)
➡️ sardines
➡️ mackerel
➡️ milk
➡️ cooking oil
➡️ packed noodle-based instant meals
 ➡ ️refined sugar
Rate: 4%
Base: gross value in money of the purchases of primary agri products w/c are used as
input in production

Standard Input VAT

What: sale to the gov't
Rate: 7% of SP
❗no longer applicable effective 1/1/2021

Withholding VAT ✅lease or use of prop. or prop. rights owned by NRs

✅other services rendered by NRs
Rate: 12%

Substituted VAT return

Seller must execute 2 docs:
✅waiver of the priviliege to claim IT credit
✅notice of availment of the option to pay VAT to the withholding process
the output VAT upon sale will be withheld by the buyer to be remitted to the BIR. thus, the
buyer will pay the seller of the price exclusive of VAT

buyer files BIR form 1600-VT; seller filed BIR form 2306 w/c will be a substitute VAT return

Sale to gov't
Rate: 5% creditable withholding VAT

Rules on Timing of Input VAT ➡️Importation - pmt of VAT before releasing from custom's custody
➡️Purchase of domestic goods or properties - upon consummation of sale
➡️Purchase of services, lease of properties, real properties - upon payment

K-TAPUSAN