6 Vat

VAT
VAT EXEMPT TRANSACTIONS:

a. Sale or importation of agricultural and marine food products in their original
state, livestock and poultry of a kind generally used as, or yielding or producing
foods for human consumption; and breeding stock and genetic materials
therefore;
b. Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn,
livestock and poultry feeds, including ingredients, whether locally produced or
imported, used in the manufacture of finished feeds (except specialty feeds for
race horses, fighting cocks, aquarium fish, zoo animals and other animals
considered as pets);
therefore;
Original State (unprocessed)
1. Preparation for the market (boiling, broiling, husking, roasting, grinding)
2. Preservation (freezing, drying, salting, smoking)
3. Packaging (shrink wrapping, vacuum packing, tetra packing)
a. Original State:
a. Husked rice
b. Corn grits
c. Raw cane sugar
d. Roasted coffee beans
e. Ordinary salt
f. Copra
g. Dried fish
h. Sundried fruits
i. Ground meat
j. Smoked fish
a. Processed:
a. Refined sugar
b. Wine or vinegar
c. Butter
d. Canned sardines or mackerel
e. Vegetable or coconut oil
f. Soy
An entity owns a meat and fish outlet in
the Baguio City public market. He had the
following sales during the month:
Sale of live hogs 120,000

Sale of frozen carcass and meat 240,000
Sale of fresh fishes 150,000
Sale of dried and smoked fish 80,000
An entity engaged in farming had the
Sale of palay and rice 120,000

Sale of banana and mushroom 240,000
Sale of firewood 150,000
Sale of orchids and bonsai 80,000
An entity owns a meat and fish outlet in
the Baguio City public market. He had the
Sale of live hogs 120,000

Sale of frozen carcass and meat 240,000
Sale of fresh fishes 150,000
Sale of dried and smoked fish 80,000
therefore;
b. Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn,
livestock and poultry feeds, including ingredients, whether locally produced or
imported, used in the manufacture of finished feeds (except specialty feeds for
race horses, fighting cocks, aquarium fish, zoo animals and other animals
considered as pets);
c. Importation of personal and household effects belonging to residents of the
Philippines returning from abroad and non-resident citizens coming to resettle in
the Philippines; Provided, that such goods are exempt from custom duties under
the Tariff and Customs Code of the Philippines;
c. Importation of personal and household effects belonging to residents of the
Philippines returning from abroad and non-resident citizens coming to resettle in
the Philippines; Provided, that such goods are exempt from custom duties under
the Tariff and Customs Code of the Philippines;
Such goods must be exempt from customs duties.

d. Importation of professional instruments and implements, tools of trade,
occupation or employment, wearing apparel, domestic animals, and personal and
household effects ( except vehicles, vessels, aircrafts machineries and other similar
goods for use in manufacture which are subject to duties, taxes and other charges)
belonging to persons coming to settle in the Philippines or Filipinos or their families
and descendants who are now residents or citizens of other countries, such parties
hereinafter referred to as overseas Filipinos, in quantities and of the class suitable
to the profession, rank or position of the persons importing said items, for their
own use and not barter or sale, accompanying such persons, or arriving within a
reasonable time; Provided, That the Bureau of Customs may, upon the production
of satisfactorily evidence that such persons are actually coming to settle in the
Philippines and that the goods are brought from their place of residence, exempt
such goods from payment of duties and taxes.
d. Importation of professional instruments and implements, tools of trade,
occupation or employment, wearing apparel, domestic animals, and personal and
household effects ( except vehicles, vessels, aircrafts machineries and other
similar goods for use in manufacture which are subject to duties, taxes and other
charges) belonging to persons coming to settle in the Philippines or Filipinos or
their families and descendants who are now residents or citizens of other
countries, such parties hereinafter referred to as overseas Filipinos, in quantities
and of the class suitable to the profession, rank or position of the persons
importing said items, for their own use and not barter or sale, accompanying such
persons, or arriving within a reasonable time; Provided, That the Bureau of
Customs may, upon the production of satisfactorily evidence that such persons are
actually coming to settle in the Philippines and that the goods are brought from
their place of residence, exempt such goods from payment of duties and taxes.
e. Services subject to percentage tax under Title V of the Tax Code, as amended;
f. Services by agricultural contract growers and milling for others of palay into rice,
corn into grits, and sugar cane into raw sugar;
g. Medical, dental, hospital and veterinary services except those rendered by
professionals;
f. Services by agricultural contract growers and milling for others of palay into
rice, corn into grits, and sugar cane into raw sugar;
professionals;
f. Services by agricultural contract growers and milling for others of palay into rice,
corn into grits, and sugar cane into raw sugar;
professionals;
h. Educational services rendered by private educational institutions duly accredited by the
Department of Education (DepED), the Commission on Higher Education (CHED) and the
Technical Education and Skills Development Authority (TESDA) and those rendered by the
government educational institutions;
i. Services rendered by individuals pursuant to an employer-employee relationship;
j. Services rendered by regional or area headquarters established in the Philippines by
multinational corporations which act as supervisory, communications and coordinating centers
for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn or derive
income from the Philippines;
multinational corporations which act as supervisory, communications and coordinating centers
for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn or derive
income from the Philippines;
multinational corporations which act as supervisory, communications and coordinating
centers for their affiliates, subsidiaries or branches in the Asia-Pacific Region and do not earn
or derive income from the Philippines;
k. Transactions which are exempt under international agreements to which the
Philippines is a signatory or under special laws except those granted under P.D.
No. 529 - Petroleum Exploration Concessionaires under the Petroleum Act of
1949;
l. Sales by agricultural cooperatives duly registered and in good standing with the
Cooperative Development Authority (CDA) to their members, as well as of their
produce, whether in its original state or processed form, to non-members, their
importation of direct farm inputs, machineries and equipment, including spare
parts thereof, to be used directly and exclusively in the production and/or
processing of their produce;
k. Transactions which are exempt under international agreements to which the
Philippines is a signatory or under special laws except those granted under P.D. No.
529 - Petroleum Exploration Concessionaires under the Petroleum Act of 1949;
• Sales to their members

• Sales to non-members if the cooperative is the producer (if not, VATABLE)
• Importation of:
• Direct farm inputs, machineries and equipment, including spare parts thereof
• To be used directly and exclusively in the production and/or processing of their produce
m. Gross receipts from lending activities by credit or multi-purpose cooperatives
duly registered and in good standing with the Cooperative Development
Authority;
n. Sales by non-agricultural, non-electric and non-credit cooperatives duly
registered with and in good standing with CDA; Provided, that the share capital
contribution of each member does not exceed Fifteen Thousand Pesos
(P15,000.00) and regardless of the aggregate capital and net surplus ratably
distributed among the members;
o. Export sales by persons who are not VAT-registered;
duly registered and in good standing with the Cooperative Development Authority;
duly registered and in good standing with the Cooperative Development Authority;
p. The following sales of real properties:
• Sale of real properties not primarily held for sale to customers or held for lease in the
ordinary course of trade or business.
• Sale of real properties utilized for low-cost housing as defined by RA No. 7279, otherwise
known as the "Urban Development and Housing Act of 1992" and other related laws, such
as RA No. 7835 and RA No. 8763;
• Sale of real properties utilized for specialized housing as defined under RA No. 7279, and
other related laws, such as RA No. 7835 and RA No. 8763, wherein price ceiling per unit is
Php 450,000.00 or as may from time to time be determined by the HUDCC and the NEDA
and other related laws;
• Sale of residential lot valued at One Million Five Hundred Thousand Pesos (P1,500,000.00)
and below, or house and lot and other residential dwellings valued at Two Million Five
Hundred Thousand Pesos (P2,500,000.00) and below,
q. Lease of residential units with a monthly rental per unit not exceeding Fifteen
Thousand Pesos (P15,000.00), regardless of the amount of aggregate rentals
received by the lessor during the year; Provided, that not later than January 31,
2009 and every three (3) years thereafter, the amount of P10,000.00 shall be
adjusted to its present value using the Consumer Price Index, as published by the
Philippine Statistics Authority (Formerly known as NSO);
r. Sale, importation, printing or publication of books and any newspaper, magazine,
review or bulletin which appears at regular intervals with fixed prices for
subscription and sale and which is not devoted principally to the publication of
paid advertisements;
s. Transport of passengers by international carriers;
r. Sale, importation, printing or publication of books and any newspaper,
magazine, review or bulletin which appears at regular intervals with fixed prices
for subscription and sale and which is not devoted principally to the publication
of paid advertisements;
t. Sale, importation or lease of passenger or cargo vessels and aircraft, including
engine equipment and spare parts thereof for domestic or international transport
operations; Provided, that the exemption from VAT on the importation and local
purchase of passenger and/or cargo vessels shall be subject to the requirements on
restriction on vessel importation and mandatory vessel retirement program of
Maritime Industry Authority (MARINA);
u. Importation of fuel, goods and supplies by persons engaged in international shipping
or air transport operations; Provided, that the said fuel, goods and supplies shall be used
exclusively or shall pertain to the transport of goods and/or passenger from a port in the
Philippines directly to a foreign port, or vice-versa, without docking or stopping at any
other port in the Philippines unless the docking or stopping at any other Philippine port
is for the purpose of unloading passengers and/or cargoes that originated form abroad,
or to load passengers and/or cargoes bound for abroad; Provided, further, that if any
portion of such fuel, goods or supplies is used for purposes other that the mentioned in
the paragraph, such portion of fuel, goods and supplies shall be subject to 12% VAT;
t. Sale, importation or lease of passenger or cargo vessels and aircraft, including engine
equipment and spare parts thereof for domestic or international transport operations;
Provided, that the exemption from VAT on the importation and local purchase of
passenger and/or cargo vessels shall be subject to the requirements on restriction on
vessel importation and mandatory vessel retirement program of Maritime Industry
Authority (MARINA);
u. Importation of fuel, goods and supplies by persons engaged in international shipping
or air transport operations; Provided, that the said fuel, goods and supplies shall be used
exclusively or shall pertain to the transport of goods and/or passenger from a port in the
Philippines directly to a foreign port, or vice-versa, without docking or stopping at any
other port in the Philippines unless the docking or stopping at any other Philippine port
is for the purpose of unloading passengers and/or cargoes that originated from abroad,
or to load passengers and/or cargoes bound for abroad; Provided, further, that if any
portion of such fuel, goods or supplies is used for purposes other that the mentioned in
the paragraph, such portion of fuel, goods and supplies shall be subject to 12% VAT;
v. Services of banks, non-bank financial intermediaries performing quasi-banking
functions, and other non-bank financial intermediaries, such as money changers
and pawnshops, subject to percentage tax under Sections 121 and 122,
respectively of the Tax Code; and
w. Sale or lease of goods and services to senior citizens and persons with
disabilities, as provided under Republic Act Nos. 9994 (Expanded Senior Citizens
Act of 2010) and 10754 (An Act Expanding the Benefits and Privileges of Persons
with Disability), respectively;
x. Transfer of property in merger or consolidation (pursuant to Section 40(C)(2) of
the Tax Code, as amended);
y. Association dues, membership fees, and other assessments and charges
collected on a purely reimbursement basis by homeowners’ associations and
condominium established under Republic Act No. 9904 (Magna Carta for
Homeowners and Homeowner’s Association) and Republic Act No. 4726 (The
Condominium Act), respectively;
z. Sale of gold to the Banko Sentral ng Pilipinas (BSP) (previously zero-rated
transaction);
transaction);
transaction);
New provision/s:
• Sale of drugs and medicines prescribed for diabetes, high cholesterol, and
hypertension beginning January 1, 2019
Criteria: (Presentation considered
as quiz)
Clarity of voice 10 pts.
Entertainment factor 10 pts Accuracy
of facts 25 pts.
Audience Impact 5 pts.
50 pts.
Value-Added Tax (VAT) is a form of sales
tax. It is a tax on consumption levied on
the sale, barter, exchange or lease of
goods or properties and services in the
Philippines and on importation of goods
into the Philippines. It is an indirect tax,
which may be shifted or passed on to the
buyer, transferee or lessee of goods,
properties or services.
Who are Required to File VAT Returns?
1. 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 or receipts exceed Three
Million Pesos (Php3,000,000.00)
Who are Required to File VAT Returns?
2. Person required to register as VAT taxpayer
but failed to register
3. Any person, whether or not made in the

course of his trade or business, who imports
goods
Value-Added Tax Rates
• On sale of goods and properties - twelve percent (12%) of the gross selling price
or gross value in money of the goods or properties sold, bartered or exchanged
• On sale of services and use or lease of properties - twelve percent (12%) of gross
receipts derived from the sale or exchange of services, including the use or lease
of properties
• On importation of goods - twelve percent (12%) based on the total value used by
the Bureau of Customs in determining tariff and customs duties, plus customs
duties, excise taxes, if any, and other charges, such as tax to be paid by the
importer prior to the release of such goods from customs custody; provided, that
where the customs duties are determined on the basis of quantity or volume of
the goods, the VAT shall be based on the landed cost plus excise taxes, if any.
• On export sales and other zero-rated sales - 0%
Methods of Computing VAT:
1.Direct Method
2.Tax Credit Method
1. Invoice-based crediting
2. Non-observance of the matching of costs or
expenses and sales
A business purchased goods for 200,000 and
sold the same for 250,000. The business paid
VAT of P24,000 on the purchase of the goods.
The business tax is subject to 12% VAT.
A corporation is a VAT-registered
seller of goods. During the month,
it purchased goods for P1,120,000
inclusive of P120,000 VAT. The
company also sold goods to a
client for P1,500,000, exclusive of
VAT.
VAT Registration
VAT Registration
a. GS/GR>P3M
b. Radio and/or TVBC with annual
gross receipts of the preceding
year exceeds P10,000,000
c. Required to register but failed
VAT Registration
•Optional VAT registration
•Not allowed to cancel for the next
three (3) years
VAT Registration
•May apply not later than ten (10)
days before the beginning of the
calendar quarter
VAT Registration Cancellation
1. Written Application that his
gross sales/receipts for the ff 12
months will not exceed P3M
2. Ceased business operations
3. Power of Commissioner or
representative
VAT for seller of goods, properties
services
services
Persons Liable: Persons who
•Sells, barters goods or properties
•Leases G/P (Lessor)
•Renders service (Service Provider)
services
Formula:
Output Tax XX
Input Tax (XX)
Vat Payable/Excess Input tax XX
services
Formula:
Output Tax XX
Input Tax (XX)
OUTPUT TAX
Kinds of sale of G/P subject to VAT:
1. Actual Sale
2. Transactions deemed sale
OUTPUT TAX
1. Actual Sale
OUTPUT TAX
Mabaca Corporation made the following
sales:
Cash Sales 200k
Sales on account (80k collected) 100k
Installment Sales (120k collected)300k
600k
OUTPUT TAX
Selling Price FV
Customer A 150k 180k
Customer B 200k 190k
Customer C 102k 150k
OUTPUT TAX
Selling Price FV
Customer A 150k 180k
Customer B 200k 190k
City Gov’t 102k 150k
OUTPUT TAX
Client A (Services rendered)
Revenue Collection
Billing for materials 200,000 200,000
Service Fee 100,000 50,000
Total 300,000 250,000
Client A (Work not yet started)

Advances - 200,000
OUTPUT TAX
Sale of Properties:
1. Sale by dealer
2. Sale of properties considered as ordinary assets
3. Sale of properties not in the ordinary course of
business
OUTPUT TAX
•TAX BASE
Actual Sale:
Personal Property GSP
OUTPUT TAX
•TAX BASE
Actual Sale:
Real Property
1. Cash SaleGSP vs FMV vs ZV
2. Deferred Payment
3. Installment Plan
OUTPUT TAX
•TAX BASE
Actual Sale:
Real Property
2. Deferred Payment
3. Installment Plan
OUTPUT TAX
Gross Sales PXX
Less: Sales Discount XX
Sales R& AXX(XX)
Net Sales XX
Add: Excise Tax XX
Tax Base PXXX
OUTPUT TAX
•TAX BASE
Actual Sale:
Real Property
2. Deferred Payment
3. Installment Plan
OUTPUT TAX
•TAX BASE
Actual Sale:
Real Property
2. Deferred Payment
3. Installment Plan
OUTPUT TAX
•TAX BASE
Actual Sale:
Real Property
2. Deferred Payment
3. Installment Plan
OUTPUT TAX
•Initial Payment Components
Down Payment
Other Collections in the year of sale
Excess of unpaid mortgage over cost
OUTPUT TAX
On August 1, 2019, a realty company
sold a residential property with a FMV
of P5M for P4M. The term of the sale
requires a downpayment of P400k and
the balance payable in 200k monthly
installments starting September 30,
2019.
OUTPUT TAX
•TAX BASE
Actual Sale:
Real Property
2. Deferred Payment
3. Installment Plan
OUTPUT TAX
On August 1, 2019, a realty company sold a
commercial lot with the following data:
ZVP6,000,000
AV 4,500,000
SP 5,000,000
Downpayment is 500k with the balance due
on 36 monthly installments of 125k starting
September 1, 2014.
OUTPUT TAX
A VAT Taxpayer made a sale of real
properties with FV of P3M for P2M. It
qualified for installment reporting. During
the month, the company is due to receive
the ff:
Installment 200,000
Interest 12,000
Penalty 4,000
OUTPUT TAX
A VAT taxpayer sold the ff:
Old factory (BV 1,500,000) P1,300,000
Vacant Lot held as investment 4,000,000
OUTPUT TAX
Lolo Sot, a senior citizen, went to
Jollibee to treat his 4 grandsons.
They consumed food and
beverages with an amount of
1120. How much is the amount to
be paid by Lolo Sot?
OUTPUT TAX
1. Actual Sale
OUTPUT TAX
Transactions deemed sale:
1. Transfer, consumption, or use
not in the course of business
but originally intended for sale
or use in the ordinary course
OUTPUT TAX
A realtor transferred ownership
over residential property which is
held for sale to his daughter who is
getting married.
Cost P2M
FMV at sale P2.5M
OUTPUT TAX
2. Distribution or transfer to:
•Shareholders or investors share in
the profit of VAT registered person
•Creditors in payment of debt
OUTPUT TAX
3. Consignment of goods if actual
sale is not made w/in 60 days
following the date such goods
were consigned, and
OUTPUT TAX
A VAT Registered taxpayer has its own sales. It also consigns goods
through consignees. Results as of April 30, 2019 are as follows:
Sales- own inventories 500,000
Sales- by consignee 150,000
Sales- in behalf of consignors 100,000
Commission income on goods sold 20,000
The billed prices of outstanding consignments still held by consignees
as of April 30.
February 50,000
March80,000
April 120,000
OUTPUT TAX
4. Retirement from or cessation of
business with respect to all goods
on hand, whether or not business
is continued by the new owner or
successor
OUTPUT TAX
A VAT Registered taxpayer ceases business operation in
May 2019.
Cash 50k
Accounts Receivable 120k
Investments 180k
Inventories 200k
PPE 800k
OUTPUT TAX
Tax Base PXX
Rate X%
Output Tax PXX
A department store had the
following sales for the month:
Fertilizers 12,000
Fruits and vegetables 3,000
Groceries 40,000
Dress, Clothes 5,000
Furniture 2,000
Mr. Tabaco had the following
gross receipts during the year:
Restaurant Business 200,000
Barber Shop 3,000
Taxi Cab 40,000
Professional Practice 500,000
Mr. Tabaco had the following
gross receipts during the year:
Restaurant Business 12000
Barber Shop 3,000,000
Taxi Cab 40,000
Professional Practice 500,000
Indicate whether sales of the ff. are exempt or not:
1. Vegetables
2. Cooked rice
3. Sundried Banana
4. Canned Fish
5. Fruit Shake
6. Boiled Eggs
7. Fresh Fruits
8. Cotton
9. Wheat
10.Cacao
11.Cocoa
12.Cheese
13.Charcoal
14.Aquarium Fish
15.Zoo Animals
OUTPUT TAX
1. Export Sales
2. FC denominated sales
3. Sales to tax-exempt persons or
entities under special laws or
international agreement
OUTPUT TAX
1. Export Sales
2. FC denominated sales
3. Sales to tax-exempt persons or
entities under special laws or
international agreement
OUTPUT TAX
1. Direct Export
2. Indirect Export
3. Sale of raw materials to an export-
oriented enterprise whose export sale
exceed 70% of the total annual
production
4. Considered export sales under E.O. 226
OUTPUT TAX
1. Direct Export
2. Indirect Export
3. Sale of raw materials to an
export-oriented enterprise
4. Considered export sales under
E.O. 226
OUTPUT TAX
1. Read on Effectively-Zero Rated
Sales of Goods or Properties
OUTPUT TAX
Sales to Government and GOCCs
Subject to 5% final withholding VAT at
source on sales.
The payer need not pay further VAT on
sale.
OUTPUT TAX
A VAT registered person sold goods
to a government agency for
P400,000. These goods were
purchased for P336,000, including
input VAT.
OUTPUT TAX
A VAT registered person sold goods
to a government agency for
P400,000. These goods were
purchased for P336,000, including
input VAT.
Formula:
Output Tax XX
Input Tax (XX)
INPUT TAX
Input tax means the VAT due on or paid by a VAT-
registered on importation of goods or local
purchase of goods, properties or services,
including lease or use of property in the course
of his trade or business. It shall also include the
transitional input tax determined in accordance
with Section 111 of the Tax Code, presumptive
input tax and deferred input tax from previous
period.
Determination of INPUT VAT
VAT on purchase is usually
reflected as a separate item in the
VAT invoice or VAT official receipt
issued by the VAT-registered
supplier.
Determination of INPUT VAT
Selling Price 500,000
Output VAT 60,000
Invoice Price 560,000
What if VAT is not separately
indicated?
Selling Price stated in sales
document shall be deemed to be
inclusive of VAT.
A supplier indicated that the
560,000 invoice price without
separately indicating VAT shall be
deemed to be inclusive of VAT.
Not all Input VAT must be credited
against output VAT.
Requisites:
1. Must have been paid or incurred in
the course of business
2. Evidenced by VAT Invoice or OR
3. VAT Invoice must be issued by a VAT
Registered person
4. Incurred in relation to vatable sales
and not from exempt sales
Types of Vatable Sales:
a. Sales to gov’t
b. Export Sales
c. Regular Sales
Mrs. Aguilar had a P230,000 output VAT in the
month. She also made the following purchases
during the month:
Goods from non-VAT 280,000

Goods from VAT suppliers with VAT invoices 224,000
Importation of car for personal use, VAT incl 1,120,000
Importation of grapes and apples for sale 300,000
Importation of merchandise for sale, VAT incl 896,000
Services from VAT suppliers, ordinary receipt 120,000
Types of claimable Input VAT:
1. Transitional Input VAT
2. Regular Input VAT
3. Amortization of deferred Input VAT
4. Presumptive Input VAT
5. Standard Input VAT
6. Input VAT Carry-Over
Transitional Input VAT
Initial Input Tax Credit equivalent
to 2% of the beginning inventory of
goods, materials, or supplies or the
actual VAT paid thereon whichever
is higher.
Mr. Horace opted to register as a
VAT Taxpayer and had the ff.
inventory:
VAT-exempt goods 80,000
Vatable goods (from Non-VAT Supplier) 40,000
Equipment (From VAT Supplier) 112,000
Total Beginning Inventory 232,000
Alexander became liable to VAT after
exceeding the VAT threshold in
November 2014. The ff is the beginning
inventory for December 2014:
VAT Exempt Goods 20,000
Vatable Goods
purchased from non- VAT sellers 60,000
purchased from VAT sellers11,200
Total Inventory 91,200
Alexander became liable to VAT after exceeding the
VAT threshold in November 2014. The ff is the
beginning inventory for December 2014:
Frozen Meat 40,000
Fruits and Vegetables 50,000
Grocery Items (from VAT sellers) 22,400
Appliances (from non-VAT sellers) 30,000
Total beginning inty 142,400
Requisites:
1. Submit inventory list of goods
2. Prepare an entry recognizing the transitional
input VAT
Transitional Input VAT

Beginning Inventory
Source Timing of Credit
Purchase of G/P Month of purchase
Purchase of S Month paid
Purchase of depreciable capital G/P Month VAT is paid
- General treatment Month of purchase
- When monthly aggregate acquisition Amortized
- cost exceeds P1M
Purchase of non-depreciable vehicles and Not creditable
on maintenance incurred thereon
In March 15, 2015, ABC Company
purchased goods worth P40,000,
exclusive of VAT.
Purchase of Service Month paid
- cost exceeds P1M
retained the services of a
professional practitioner which
billed P168,000, inclusive of VAT.
The company paid the invoice on
April 15.
imported goods from abroad with
a total landed cost of P200,000.
The company paid VAT on
importation of P24,000 and
withdrew the goods on April 15
Purchase of S Month paid
- cost exceeds P1M
If monthly aggregate acquisition cost of
depreciable capital goods:
-do not exceed P1,000,000-input vat is
claimable on the month of purchase
-exceeds P1,000,000- input VAT is deferred
and amortized over the useful life in
months or 60 months (i.e. 5 years)
whichever is shorter. “Deferred Input VAT”
Monthly aggregate acquisition cost
-Total price, excluding VAT, agreed
upon one or more assets acquired
and not the payments or
installments actually made during
the calendar month.
Depreciable capital goods
-goods or properties with estimated
useful life of more than one year
which are treated as depreciable
assets for income tax purposes, used
directly or indirectly in the production
or sale of taxable goods or services.
Jeong Hyeok Company, a VAT Registered taxpayer,
purchased the following capital goods in March
2014.
Capital Goods Purchase Price Input VAT Useful Life
Equipment 600,000 P72,000 4 years
Truck* 700,000 84,000 10 years
Total 1,300,000 156,000
Acquired on installment, 100k down paid during the month.
Seri Company, a VAT Registered taxpayer, purchased
the following in July 2014.
Purchase Price Input VAT
Goods for sale 800,000 96,000
Car for personal use 1,000,000 120,000
Computers for business use 250,000 30,000
Machineries for business use 750,000 90,000
The useful life of the computers is 3 years while the machineries are
expected to last for 7 years.
Sale or transfer of depreciable capital
goods within 5 years.
If sold within 5 years prior to the
exhaustion of the amortizable input tax
thereon, the entire unamortized input tax
can be claimed as input tax credit during
the calendar month or quarter when the
sale or transfer was made.
Persons or firms engaged in the processing
of sardines, mackerel, milk, cooking oil,
and packed noodle based instant meal and
in the manufacturing of refined sugar,
shall be allowed a presumptive input vat of
4% of the gross value in money of their
purchases of primary agricultural products
which are used in their production.
Persons or firms engaged in the processing
of sardines, mackerel, milk, cooking oil,
and packed noodle based instant meal and
in the manufacturing of refined sugar,
shall be allowed a presumptive input vat of
4% of the gross value in money of their
purchases of primary agricultural products
which are used in their production.
Min Ho Corporation, a VAT registered cooking oil
manufacturer, purchased the following materials and
supplies in the processing of cooking oils during the
month. Cost Input VAT
Copra P1,200,00 -
Hexane Solvent 50,000 P6,000
Cans and bottle containers 200,000 24,000
Sodium hydroxide 80,000 9,600
Activated Carbon 100,000 12,000
Min Young Sugarie Corporation
operates a sugar refinery for clients.
During the month, it processed
P10,000,000 worth of sugarcane and
produced P40,000,000 worth of sugar.
Standard Input VAT
-5% final withholding VAT based on
gross payments
-to be remitted by gov’t

instrumentalities w/in 10 days following
the month the withholding was made.
Standard Input VAT
-Sellers to gov’t can claim an input VAT
equivalent to 7% of their sales. This is
called “Standard Input VAT”
-Difference of actual and standard
input VAT is recognized as an expense
or gain
A VAT Taxpayer purchased goods for
P10,000 plus P1,200 input VAT. It sold
the goods for P100,000 to a gov’t
agency. The sale was invoiced at
P112,000.
Input VAT Carry-Over
Excess of Input VAT over Output
VAT in a particular month or
quarter
Rules:
1. IVCO of prior quarter is deductible in the first
month of the current quarter
2. IVCO in the first month of the quarter is
deductible in the second month of the quarter
3. IVCO in the second month of a quarter is not
deductible to the third month of the quarter
4. IVCO of the prior quarter is deductible in the
third month quarterly balance of the present
quarter.
Output VATInput VAT
Prior Quarter P350,000 P390,000
Current Quarter:
1st Month 120,000 100,000
2nd Month 150,000 145,000
3rd Month 220,000 70,000
490,000 315,000
Output VATInput VAT
Prior Quarter P360,000 P400,000
Current Quarter:
1st Month 160,000 100,000
2nd Month 150,000 160,000
3rd Month 170,000 65,000
480,000 325,000
VAT on Importation
-12% of TOTAL LANDED COST
TOTAL LANDED COST
1. Dutiable Value
2. Custom Duty
3. Excise Tax
4. Other in land cost:
1. Bank Charge
2. Brokerage Fee
3. Arrastre Charge
4. Wharfage Due
5. Customs DST
6. Import Processing Fee
MRS Trading Corporation imported goods from abroad for domestic sale.
Peso Value of supplier’s invoice P2,000,000
Other costs to bring goods to PH port 70,000
Other charges before withdrawal including facilitation fee of P5,000 85,000
Customs duties 10%
Freight from BOC to warehouse 20,000
Monthly VAT Declarations
• BIR Form 2550M - Monthly Value-Added Tax Declaration (February 2007 ENCS)
• Documentary Requirements
• Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307), if
applicable
• Summary Alphalist of Withholding Agents of Income Payments Subjected to
Withholding Tax at Source (SAWT), if applicable
• Duly approved Tax Debit Memo, if applicable
• Duly approved Tax Credit Certificate, if applicable
• Authorization letter, if return is filed by authorized representative.
• Deadline
• Manual Filing - Not later than the 20th day following the end of each month
Quarterly Value-Added Tax Return
• BIR Form No. 2550Q - Quarterly Value-Added Tax Return (February 2007 ENCS)
• Documentary Requirements
• Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form 2307), if
applicable
• Summary Alphalist of Withholding Agents of Income Payments Subjected to
Withholding Tax at Source (SAWT), if applicable
• Duly approved Tax Debit Memo, if applicable
• Duly approved Tax Credit Certificate, if applicable
• Previously filed return and proof of payment, for amended return
• Authorization letter, if return is filed by authorized representative
Deadline
• Within twenty five (25) days following the close of the taxable quarter.
• What is the liability of a taxpayer becoming liable to VAT and did not register as
such?
• Any person who becomes liable to VAT and fails to register as such shall be liable
to pay the output tax as if he is a VAT-registered person, but without the benefit
of input tax credits for the period in which he was not properly registered.
• What is the liability of a taxpayer becoming liable to VAT and did not register as
such?
• Any person who becomes liable to VAT and fails to register as such shall be liable
to pay the output tax as if he is a VAT-registered person, but without the benefit
of input tax credits for the period in which he was not properly registered.
Excise Tax
Excise Tax is a tax on the production, sale or consumption
of a commodity in a country.
APPLICABILITY:
On goods manufactured or
produced in the Philippines for
domestic sale or consumption or
for any other disposition; and
On goods imported.
TYPES OF EXCISE TAX:
1. Specific Tax – refers to the excise tax imposed

which is based on weight or volume capacity or any
other physical unit of measurement
2. Ad Valorem Tax – refers to the excise tax which is
based on selling price or other specified value of the
goods/articles
MANNER OF COMPUTATION:
1. Specific Tax = No. of Units/other measurements x

Specific Tax Rate
2. Ad Valorem Tax = No. of Units/other
measurements x Selling Price of any specific value
per unit x Ad Valorem Tax Rate
PERSONS LIABLE TO EXCISE TAX:
In General:
a. On Domestic or Local Articles
• Manufacturer
• Producer
• Owner or person having possession of articles removed from the place of production
without the payment of the tax
b. On Imported Articles
• Importer
• Owner
• Person who is found in possession of articles which are exempt from excise taxes other
than those legally entitled to exemption
TIME OF PAYMENT:
In General
• On domestic products
• Before removal from the place of production
•On imported products
• Before release from the customs' custody

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VAT

VAT EXEMPT TRANSACTIONS:

Sale of live hogs 120,000

Sale of palay and rice 120,000

Sale of live hogs 120,000

Such goods must be exempt from customs duties.

• Sales to their members

3. Any person, whether or not made in the

Client A (Work not yet started)

Goods from non-VAT 280,000

Transitional Input VAT

-to be remitted by gov’t

1. Specific Tax – refers to the excise tax imposed

1. Specific Tax = No. of Units/other measurements x

a. On Domestic or Local Articles

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