PERSON LIABLE FOR VAT 4.

Retirement or cessation from business with respect to inventories

-Any person engaged in trade, business, sale, exchange, barter,

lease, rendering of services and importation
SALES RETURN, ALLOWANCES AND DISCOUNTS

-Goods sold and subsequently returned may be deducted from gross

VAT sales/ receipts for the quarter which refund is made

-Tax on consumption. Seller is the one who is statutorily liable to

pay but can be shifted the burden to buyer
Tax of goods by Tax-Exempt Person
-12% to every: Sale of Goods/Services, Importation
- Tax free on importation and can claim refund for input taxes if
subsequently sold in PH

Elements of VAT

1. Oridinary course of trade or business INPUT TAX

2. There must be sale, exchange, barter, lease etc -Can be recovered as tax credit if shouldered by seller

3. Not tax exempt or VAT zero-rated

OUTPUT TAX

VAT ON SALE OF GOODS/PROPERTIES -Not recoverable bcus can be shifted to buyer

-12% base on the gross selling price or gross value of goods,

properties (includes tangible and intangible like patent) sold,
ZERO-RATED TRANSACTION
bartered, exchange
-Total relief from the burden of tax by purchaser bcus does not have
to pay any VAT on transaction
VAT ON SALE OF SERVICES
-Can apply for input taxes refund
-12% base on gross receipts. Services should be rendered in PH
irrespective where the contract was executed. Provided that no E-ER
relationship EXEMPT TRANSACTION

-Seller is not allowed for any tax refund on input taxes from his
suppliers- should be considered cost
VAT ON IMPORTATION

-12% on every importation whether for business or personal use

base on landed cost FF ARE ZERO-RATED SALES BY VAT-REGISTERED PERSON
- Should be paid prior to release of goods from cutoms 1. Export sale

2. Foreign currency denominated sale

Gross Selling Price 3. Sales under tax agreement treaty
-total amnt of money or its equivalent which the buyer should pay

-Excise tax forms part of gross selling price Foreign currency denominated sale

1. For delivery to residents of ph

TRANSACTION DEEMED SALE 2. Sale to nonresidents, assembled here in ph
1. Consignment of goods not sold within 60 days 3. Paid in acceptable foreign currency (does not apply to
automobile)
2. Transfer to: Creditors in payment of debt/ shareholders or
investors as shares

3. Transfer or used not in the course of business originally intended FF ARE ZERO RATED SERVICES TRANSACTION
for sale
1. Export
2. Services rendered to a person engaged in int’l shipping/ air If supplier erroneously impose VAT on goods sold to entity within
transport including lease of property separate custom duty; Remedy

3. Transport of passenger by cargo/air from ph to foreign country -Purchaser go after seller andnot gov’t bcus seller is the one
statutorily liable
4. Sale thru renewable resources

Creditable input tax

FF ARE EXEMPT TRANSACTIONS FROM VAT
-Any input tax evidenced by invoice or official receipt
1. Sale of Agricultural, marine food products in their original state
Excess output tax over input
2. Sale of Fertilizer
-Shall be paid by taxpayer: NET VAT PAYABLE
3. Sale of RP not in the ordinary course of business

4. Services subject to percentage tax

Excess input over output
5. Services in pursuit of E-ER relationship
-can be carried over to succeeding quarters
6. Importation of professional instruments for own use

7. Importation of personal and household effect coming to resettle

in PH Input taxes attributable to 0-rated sales maybe:

8. Lease of residential unit not exceeding 15k per month 1. Refunded

9. Gross annual sale does not exceed 3M 2. Credited

10. Medical dental and veterinary services except: if operates

pharmacy, sale of drugs is subject to VAT
TRANSITIONAL INPUT TAXES
11. Transaction exempt from int’l agreements
- 2% of the value of the beginning inventory or actual VAT paid
12. Transport of passenger by int’l carrier whichever is higher

- Seller shall not bill output tax to customers, hence seller not -To benefit the newly VAT registered person
allowed to any refund

PRESUMPTIVE INPUT TAX

Export Sale
-4% of gross value in money for those engaged in processing in:
- Exportation of goods outside of ph irrespective of shipping
A. Mackerel
arrangement
B. Milk
-Sale of raw materials to nonresident buyer for delivery to a
resident local export C. Sardines
-Sale of goods, supplies, equipment and fuels to person engaged in D. Sugar
int’l shipping or int’l air transport operation
E. Cooking oil

F. Packed noodle
ECOZONES
-Considered foreign territory hence not taxable importation ff the
destination principle
WITHOLDING CREDITABLE VAT;2 instances
-Does not cover petrol products (still taxable)
1. Sale to gov’t: 5%

2. Payment for lease/ use of properties to nonresident owners: 12%

Unrecovered VAT in Exempt transaction witheld by lessee

- considered cost
If actual input vat attributable to sales to gov’t exceed 7% of gross
payments
-Excess may form part of seller’s expense -No benefit of input tax credit

If actual input vat is less 7% CANCELLATION OF VAT REGISTRATION

-Considered income -written application

-Cease from carrying trade/business and does not recommence any

trade within next 12 mns
3 INSTANCES to avail VAT refund
-Cancellation effective from 1st day of ff month
1. 0-rated transaction

2. Cessation from business

If person who is not a VAT Registered person issues an invoice/OR
3. Cessation of VAT status
showing his TIN followed by word ‘VAT issuer shall:
-Within 2 yrs apply for VAT credit certificate for any unused tax
1. Liable for 3% percentage taax

2. Liable for VAT 12%

VAT REFUND/TAX CREDIT
3. Surcharge of 50%
1. Administrative Claim

-within 2 yrs
RETURN AND PAYMENT OF VAT
-Reckoned from the time of the relevant sale was made in every
-File quarterly return of his quarterly gross sales within 25 day
close of taxable quarter
following the close of taxable quarter

-pay on monthly basis

2. Judicial Claim

-Within 30 days(mandatory) after the lapse of 120 days of inaction

BASIS OF PERCENTAGE TAX
of CIR
-3% of the gross receipts of VAT

FF NOT SUBJECT TO OUTPUT TAX

EXCISE TAX
1. Change in name of corp
-5% of the gross net of VAT
2. Change of control of corporation
-Impose in addition to indirect taxes such as VAT
3. Merger/ consolidation of corporation

EXCISE TAX RETURN

SALE on INSTALLMENTS of RP by REAL ESTATE DEALER
- Filed and paid by manufacturer, importer, of goods before removal
- Subject to 12% VAT on installment payment from place of production

VAT REGISTRATION COVERAGE OF EXCISE TAX

- Register with BIR 1. Invasive cosmetic procedure

-500 paid annually for every distinct business 2. Surgeries

-Every taxpayer not subject to VAT but subject to excise/ percentage 3. Body enhancement
tax must register also

Exclusion:
If person who is mandated to register does nor register; liable for
- Noninvasive cosmetic procedure and surgeries
- Payment of VAT as if VAT registered
PERSON LIABLE FOR EXCISE TAX Nonstock/nonprofit is liable for VAT as long as they charges fee

1. Importer

2. Manufacturer Sale of vehicle used in the business of taxpayer while isolated is

subject to VAT
3. Owner/possessor of untaxed products

Automobile shop who sells 5 parcels of land and real estate

BIR POWER
dealer who sold a parcel of land, both is liable for VAT
1. Assess and collect tax, fees

2. Enforce forefiture, penalty, fines

If taxpayer render service to an affiliate for a fee (even if fee is
3. Execute judgment merely reimbursement) service is subject to VAT

SEC OF FINANCE POWER Affiliate who provides funds to pay 3rd person, transaction is
not subject to VAT bcus mere dole-out
-Affirm, revise, modify rulings and issuance of BIR /CIR

-DOES NOT have the power over disputed assessment, refund,

penalties arising under NIRC Fees collected by toolway operators are subject to VAT

CIR POWER Once goods are introduced in Ph from ecozones, they are not
subject to VAT - Technical Importation
1. Conduct inventory

2. Decide disputes
VAT system generally follows destination principle - exports are
3. Delegate power to assess 0 tax while imports are taxed except: foreign currency denominated
sale
4. Interpret NIRC

5. Ensure provision and distribution o form, receipt, ets

In zero rated transaction, seller who cahrages 0 output tax can
6. Make assessment and inquire into bank deposits
claim refund or credit certificate for the VAT previously charged by
7. Place business under survaillance supplier

BEST EVIDENCE OBTAINABLE Application for VAT Refund must be accompanied by complete
supporting document, under oath. If not complete- denied.
- When tax report is required but cannot be obtained

Official receipt for refund must be in the name of the taxpayer

2 KINDS OF ASSESSMENT claimant

VAT EXEMPT SALE shall be written/ printed on OR/Invoice

Failure to print the word 0-rated on VAT invoices or OR is fatal

Gross Receipts does not include amnt which do not redounded to claims for refund
to the benefit of the payor

Importation is subject to VAT WON in the course of trade or

business or personal use