Philippines 2011 Vat GST Essentials

GLOBAL INDIRECT TAX
Philippines
Country VAT/GST Essentials kpmg.com
TAX
b | Philippines: Country VAT/GST Essentials
2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved.
Philippines:
Country VAT/GST Essentials
Contents
Scope and Rates What supplies are liable to VAT? What is the standard rate of VAT? Are there any reduced rates, zero rates, or exemptions? Who is required to register for local VAT? Are there any simplifications that could avoid the need for an overseas company to register for VAT? VAT Grouping Is VAT grouping possible? Can an overseas company be included in a VAT group? How frequently are VAT returns submitted? Are there any other returns that need to be submitted? VAT Recovery Can I recover VAT if I am not registered? Does your country apply reciprocity rules for reclaims submitted by non-established businesses? Are there any items that you cannot recover VAT on? International Supplies of Goods and Services How are exports of goods and services treated? How are goods dealt with on importation? How are services which are brought in from abroad treated for VAT purposes? 2 2 4 4 4 Invoices 7 What do I have to show on a tax invoice? Can I issue invoices electronically? Is it possible to operate self-billing? Transfers of Business Is there a relief from VAT for the sale of a business as a going concern? Options to Tax Are there any options to tax transactions? Head Office and Branch Transactions 7 7 7 8 8 8 8 8
Registration 4 Are there penalties for not registering or late registration? 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6
How are transactions between head office and branch treated? 8 Bad Debt Am I able to claim relief for bad debts? Anti-Avoidance Is there a general anti-avoidance provision under VAT law? Penalty Regime What is the penalty and interest regime like? 9 9 9 9 9 9
Returns 5
All information reflected in this document was obtained/summarized from KPMG in Philippines as of October 2011.
2 | Philippines: Country VAT/GST Essentials
Scope and Rates

What supplies are liable to VAT? VAT 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. Any person in the Philippines, or entity who, in the course of his trade or business, sells, barters, exchanges or leases good or properties, or renders services in the Philippines, and any person who imports shall be liable to VAT imposed pursuant to the Philippine Tax Code. A. Sale of Goods and Properties The term goods or properties refers to all tangible and intangible objects which are capable of pecuniary estimation and shall include, among others: real properties held primarily for sale to customers or held for lease the right or the privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right the right or the privilege to use any industrial commercial or scientific equipment the right or the privilege to use motion picture films, films, tapes and discs radio, television, satellite transmission and cable television time. Also, included in the sale of goods or properties are those considered as transactions deemed sale provided under Section 106[B] of the Tax Code, to wit: Transfer, use or consumption of goods or properties originally intended for sale or for use in the course of business. Transfer of goods or properties not in the course of business can take place when VAT-registered person withdraws goods from his business for his personal use. Distribution or transfer to: Property dividends which constitute stocks in trade or properties primarily held for sale or lease declared out of retained earnings on or after January 1, 1996 and distributed by the company to its shareholders shall be subject to VAT based on the fair market value at the time of distribution. Creditors in payment of debt or obligation. Consignment of goods if actual sale is not made within 60 days following the date such goods were consigned. Consigned goods returned by the consignee within the 60-day period are not deemed sold. Retirement from or cessation of business with respect to all goods on hand, whether capital goods, stockin-trade, supplies or materials as of the date of such retirement or cessation, whether or not the business is continued by the new owner or successor. The following circumstances shall also give rise to transactions deemed sale: Change of ownership of the business. There is a change in the ownership of the business when a single proprietorship incorporates; or the proprietor of a single proprietorship sells his entire business. Dissolution of a partnership and creation of a new partnership which takes over the business.
With regard to sale of real properties, for it to be subject to VAT, such should be held primarily for sale to customers or held for lease in the ordinary course of trade or business of the seller. In addition, the gross selling price should exceed PHP1,500,000.00 for residential lot and PHP2,500,000.00 for residential house and lot. If the sale is on installment basis with gross selling price exceeding PHP1,000,000.00 shall also be liable to VAT. Sale of real property on installment plan is understood to be a sale of real property by a real estate dealer, the initial payments of which in the year of sale do not exceed 25 percent of the gross selling price.
Philippines: Country VAT/GST Essentials | 3
B. Importation of Goods VAT is imposed on goods brought into the Philippines, whether for use in business or not, unless specifically exempted. VAT will apply to technical importation of goods sold by a person located in the Special Economic Zone to a customer located outside the economic zone. C. Sale of Services and Use or Lease of Properties Sale or exchange of services means the performance of all kind of services in the Philippines for others for a fee, remuneration or consideration, whether in kind or in cash, including those performed or rendered, among others, by the following: construction and service contractors lessors of property, whether personal or real lessors or distributors of cinematographic films proprietors, operators, or keepers of hotels, rest houses, pension houses, inns, resorts proprietors or operators of restaurants, refreshment parlors, cafes and other eating places, including clubs and caterers dealers in securities lending investors common carriers by air and sea relative to their transport of passengers, goods or cargoes
sales of electricity by generation, transmission, and/or distribution companies franchise grantees of electric utilities, telephone and telegraph, radio and/or television broadcasting and all other franchise grantees non-life insurance companies (except their crop insurances), including surety, fidelity, indemnity and bonding companies the lease or the use of or the right or privilege to use any copyright, patent, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right the supply of services by a non-resident person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any brand, machinery or other apparatus purchased from such nonresident person the supply of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme the lease of motion picture films, films, tapes, and discs the lease or the use of, or the right to use, radio, television, satellite transmission and cable television time.
Registration
What is the standard rate of VAT? The prevailing rate of VAT is 12 percent of the gross selling price or gross value in money or gross receipts from the sale, exchange or lease of goods or properties and services in the Philippines and on importation of goods into the Philippines. Are there any reduced rates, zero rates, or exemptions? The Philippine VAT laws provide for VATable transactions subject to zero-rate, exempt, and 5 percent withholding VAT in case of sale to the Philippine government. VAT-exempt transactions refer to sale of goods or properties and/or services and the use or lease of properties that is not subject to VAT (output tax) and the seller is not allowed any tax credit of VAT (input tax) on purchases. A zero-rated sale of goods or properties, on the other hand, is a taxable transaction for VAT purposes but shall not result in any output tax. The 5 percent withholding VAT is imposed to the government or any of its political subdivisions, instrumentalities or agencies including government owned and controlled corporations before making payment on account of each purchase of goods and/or services taxed at 12 percent VAT. Who is required to register for local VAT? In general, any person who, in the course of his trade or business, sells, exchanges or leases goods or properties, or renders services, and any person who imports goods, shall be liable to VAT, hence, required to register in the VAT System. Note that there is no separate registration for VAT only. A tax identification number (TIN) assigned to a taxpayer shall be applied for all tax types including income tax and VAT. Persons Required to register for VAT Any person who, in the course of trade or business, sells, barters or exchanges goods or properties, or engages in the sale or exchange of services, shall be liable to register if gross sales or receipts for the past 12 months, have exceeded One million five hundred thousand pesos (PHP1,500,000); or if there are reasonable grounds to believe that his gross sales or receipts for the next 12 months, will exceed PHP1,500,000. Every person who becomes liable to be registered shall do so with the Revenue District Office which has jurisdiction over its Philippine business address. Optional registration for VAT of exempt person Any person who is not required to register for VAT may elect to register for VAT, which shall not be cancelled for the next three years.
VAT Grouping
Are there penalties for not registering or late registration? For those persons/entities required to register under the VAT law, but fails to register will still be liable to output tax as if a VAT-registered person, but without the benefit of input tax credits for the period in which he was not properly registered. In addition to other administrative and penal sanctions provided for in the Tax Code and implementing rules and regulations, the Commissioner of Internal Revenue or his duly authorized representative may order the suspension or closure of a business establishment for a period of not less than five (5) days for failure of any person to register as required under the Tax Code. Are there any simplifications that could avoid the need for an overseas company to register for VAT? Overseas companies need not register under the Philippine VAT system unless it has an entity registered before the Securities and Exchange Commission. The mechanism in the Philippines is withholding VAT payments on non-residents. Is VAT grouping possible? The recognition of a VAT group is not contemplated by VAT laws as far as the Philippine VAT system is concerned. Can an overseas company be included in a VAT group? The VAT grouping concept is not applicable in the Philippines.
Returns
How frequently are VAT returns submitted? See discussion below Are there any other returns that need to be submitted? In general, every person liable to pay VAT shall file the following returns: monthly VAT declaration within 20 days after the end of the month quarterly return of the amount of his quarterly gross sales or receipts within 25 days following the close of taxable period; and if applicable remittance Return of VAT and other Percentage taxes withheld for those required to withhold VAT.
VAT Recovery
Can I recover VAT if I am not registered? No. Under Philippine laws, only VAT-registered person are entitled to claim for refund on excess input tax. Does your country apply reciprocity rules for reclaims submitted by non-established businesses? No, not applicable in the Philippines. Are there any items that you cannot recover VAT on? As a general rule, excess input tax can be recovered subject to substantiation requirements.
International Supplies of Goods and Services

How are exports of goods and services treated? Exports of goods and services are subject to VAT at 0 percent rate. How are goods dealt with on importation? Importation of goods is subject to 12 percent VAT, as a general rule. How are services which are brought in from abroad treated for VAT purposes? The tax situs of the performance of services is the place where services were performed. Thus, all services performed in the Philippines shall be subject to 12 percent VAT. Services performed outside of the Philippines are not subject to VAT.
Invoices
What do I have to show on a tax invoice? A VAT-registered person shall issue: a VAT invoice for every sale, barter or exchange of goods or properties a VAT official receipt for every sale or exchange of services, including lease of goods or properties. If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt. The seller has the option to issue separate invoices or receipts for the taxable, exempt, and zerorated components of the sale. The name, address and TIN of the purchaser, customer or client, shall be indicated in addition to the information required in (1) and (2).
The following information shall be indicated in VAT invoice or VAT official receipt: a statement that the seller is a VAT-registered person the total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT. Provided, that: The amount of tax shall be shown as a separate item in the invoice or receipt. If the sale is exempt from VAT, the term VAT-exempt sale shall be written or printed prominently on the invoice or receipt. If the sale is subject to 0 percent VAT, the term zero-rated sale shall be written or printed prominently on the invoice or receipt.
Can I issue invoices electronically?

Philippine seller of goods can provide e-invoices with prior approval from the Philippine tax authorities.
Is it possible to operate self-billing? We understand that self-billing refers to the system where the buyer prepares the VAT invoice on behalf of their VAT-registered supplier. This option is not available under the current Philippine VAT system.
Transfers of Business
Is there a relief from VAT for the sale of a business as a going concern? Philippine VAT law provides for transaction deemed sale for transfer, use or consumption not in the course of business of goods or properties originally intended for sale or for use in the course of business. Moreover, Philippine tax courts had the occasion to hold that VAT applies to a supply [sale] in the course or furtherance of business includes: (1)the disposition of the assets and liabilities of a business, (2)the disposition of a business as going concern; and (3)anything done in connection with the termination or intended termination of a business. (CS Garments Inc. vs. the Commissioner of Internal Revenue, C.T.A. EB Case No. 287 . 14 January 2008.)
Head Office and Branch Transactions

How are transactions between head office and branch treated? The VAT treatment of the transactions between the foreign head office and its Philippine branch office has been the subject of conflicting point of views specifically on whether a sale service will qualify for VAT zero rating, due to a court decision. One view considers the transaction between the head office and branch as distinct from the single corporate entity concept that sale of service may qualify for zero-rated VAT. The head office under this view is considered as doing business outside the Philippines. The other view is that the head office and the branch is a single corporate entity thus the sale of service cannot qualify for VAT zero rating. The foreign head office is considered a resident foreign corporation because it is transacting business in the Philippines. (Marubeni Corporation vs. Commissioner of Internal Revenue, GR No. 76573 dated 14 September 1989.)
Options to Tax
Are there any options to tax transactions? This option is not available in the Philippines.
Bad Debt
Am I able to claim relief for bad debts? No. Relief for bad debts under the Philippine VAT law is unavailable.
Penalty Regime
What is the penalty and interest regime like? The Philippine tax laws impose different penalties for specific acts/omissions. In general, the penalties are the following: Interest is generally imposed at the rate of 20 percent per annum from the date prescribed for payment until the amount is fully paid. Imprisonment ranging from not less than one year to not more than 12 years, depending on the infraction Closure of business temporary/permanent, depending on the infraction.
Anti-Avoidance
Is there a general anti-avoidance provision under VAT law? Sec 254 of the Tax Code provides that any person who willfully attempts in any manner to evade or defeat any tax imposed under this Code or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than PHP30,000 but not more than PHP100,000 and suffer imprisonment of not less than two years but not more than four years.
www.kpmg.com
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. 2012 KPMG International Cooperative (KPMG International), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis--vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. Designed by Evalueserve. Publication name: Philippines Country VAT/GST Essentials Publication number: 111202 Publication date: January 2012

Philippines 2011 Vat GST Essentials

Загружено:

Сведения о документе

Исходное описание:

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Philippines 2011 Vat GST Essentials

Загружено:

Авторское право:

Доступные форматы

GLOBAL INDIRECT TAX

b | Philippines: Country VAT/GST Essentials

Registration 4 Are there penalties for not registering or late registration? 5 5 5 5 5 5 5 6 6 6 6 6 6 6 6

2 | Philippines: Country VAT/GST Essentials

Scope and Rates

Philippines: Country VAT/GST Essentials | 3

4 | Philippines: Country VAT/GST Essentials

Philippines: Country VAT/GST Essentials | 5

6 | Philippines: Country VAT/GST Essentials

International Supplies of Goods and Services

Philippines: Country VAT/GST Essentials | 7

Can I issue invoices electronically?

8 | Philippines: Country VAT/GST Essentials

Head Office and Branch Transactions

Philippines: Country VAT/GST Essentials | 9

Вам также может понравиться