BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 89

SUGGESTED ANSWERS
Chapter 12: Input VAT Credits and Refunds

CHAPTER 12

INPUT VAT CREDITS AND REFUNDS

Problem 121
1. True
2. False should not be subjected to the same tax.
3. False VAT refund.
4. False excess of input VAT over output VAT.
5. False VAT sales invoice or VAT official receipt.
6. True
7. True for as long as the buyer is VAT-registered.
8. False importation is subject to VAT whether for business or personal use.
9. True
10. True
11. False goods for sale is not covered by the P1,000,000 threshold. The goods
must depreciated/amortized as a result of use in business.
12. False only zero-rated/ effectively zero-rated sales and cancellation of VAT registration
can apply for TCC issuance.
13. True
14. False the resident lessee or licensee must file the VAT return in the name of
nonresident foreign entity.
15. True
Problem 122
1. True
2. False not creditable.
3. True
4. False TIV is granted only once when a non-VAT taxpayer shifts to VAT.
5.
6.
7.
8.
9.
10.
11.
12.
13.

False PIV is intended only the primary raw materials used in the processing of
sardines, mackerel, milk, refined sugar, cooking oil, packed noodles based instant
meals.
True
True
True
False within 2 years.
True
True
True
True

14. False input VAT related to zero-rated or effectively zero-rated sales and input VAT of
VAT-registered person cancelling to non-VAT.
15. True
Problem 123
1. B
2. C
3. D
4. C
5. D
6. B sugar only
7. D
8. A

9. C
10. A

BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 90
SUGGESTED ANSWERS
Chapter 12: Input VAT Credits and Refunds

Problem 12 4
A
Zero. The business is non-VAT; hence, no input VAT is allowed.
Problem 12 5
A
Output VAT (P425,600/9.3333)
Less: Input VAT (P448,000/9.3333)
Input VAT carry-over

P45,600
48,000
P 2,400

VAT-registered buyers of non-VAT business that collects VAT is allowed to deduct input VAT.
Problem 12 6
D
Input VAT from:
VAT invoice in the name of Capoy Enterprises (P224,000/9.333)
NonVAT invoice with VAT charges (P168,000/9.333)
Total creditable input VAT

P 24,000
18,000
P42,000

The VAT invoice in the name of Capuypoy Trading is not allowed because it does not bear the
name of Capoy Enterprises.
Problem 12 7
B
Input VAT from VAT purchased invoice (P1,792,000/9.333)
Non-VAT purchase invoice (P313,600/9.333)
Transitional input VAT
Total input VAT from purchases
Less: Proportionate input VAT for sales to the government
(P192,000 + P33,600) x 500/2,000
Input VAT balance
Add: Standard input VAT on sales to government (P560,000/9.333) x 7%
Total creditable input VAT

P192,000
33,600
5,800
P231,400
56,400
P175,000
35,000
P210,000

Problem 12 8
A
Purchases per VAT invoice amount (P140,000/9.3333)
Payments for VAT persons services inclusive of VAT (P1,232/9.3333)
Payment for services of VAT person, net of VAT (P917 x 12%)
Total available input VAT

P 15,000
132
110
P 15,242

Problem 12 9
C
Input VAT from:
Machine 1 inventory (P1,680,000/9.333)
Amortization of input VAT from:
Machines 2 and 3 [(P672,000 + P560,000)/9.333]/60 months
Creditable input VAT January

P180,000
2,200
P182,200

Note: Machines 2 and 3 are depreciable capital goods with aggregate costs of P1,100,000
excluding VAT; hence, their input VAT is subject to amortization of 60 months or estimated useful
life, whichever is shorter.
Problem 12 10

Output VAT
Input VAT from purchases of:
Goods
Capital goods March acquisition
Capital goods February acquisition
Net VAT payable (refundable)

January
P120,000

February
P156,000

March
P180,000

(72,000)

(84,000)

.
P 48,000

( 3,000)
P 69,000

(96,000)
(60,000)
( 3,000)
P21,000

BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 91
SUGGESTED ANSWERS
Chapter 12: Input VAT Credits and Refunds

Problem 12 11
1. Letter B
Total costs incurred to date
Year 1
Year 2
Multiplied by percent of construction costs subject to VAT
Construction costs subject to VAT
Multiplied by VAT rate
Creditable input VAT in year 2
2.

Letter C
Output VAT
Less: Input VAT from purchases
Input VAT from construction in progress
Year 3 (P3,000,000 x 60% x 12%)
Net VAT payable

Problem 12 12
A
Output VAT
Less: Input VAT from purchases
Input VAT from CIP:
Materials (P3,600,000 x 30%)
Labor (P2,400,000 x 20%)
Overhead (P1,200,000 x 20%)
Net VAT payable

P4,000,000
8,000,000 P12,000,000
60%
P 7,200,000
12%
P
864,000

P1,200,000
216,000

P2,000,000
1,080,000
480,000
240,000

Problem 12 13
1. Letter D
Purchases from VAT person (P644,000/9.333)
Purchases from Non-VAT person in VAT invoice (P61,600/9.333)
Payments to VAT services (P56,000/9.333)
Total creditable input VAT

1,416,000
P2,184,000
P6,000,000

3,800,000
P2,200,000

P69,000
6,600
6,000
P81,600

2. Letter A
Output VAT (P784,000/9.333)
Less: Creditable input VAT
Net VAT payable (refundable)

P 84,000
81,600
P 2,400

Problem 12 14
B
Equipment (P2,500,000 x 12%) = P300,000/60
Supplies (P10,000 x 12%) = P1,200
Goods (P800,000 x 12%) = P96,000
Creditable input VAT
Problem 12 15
C
Siopao machine (P300,000 x 1)
Siomai machines (P250,000 x 2)
Pizza machines (P200,000 x 3)
Oven (P150,000 x 4)
Total amount
Add: Custom duty (P2,000,000 x 10%)
Excise tax (P2,000,000 x 5%)
Storage fee (P2,000,000 x 2%)
Total landed costs
Multiplied by VAT rate
Input VAT

P3,600,000

P 5,000
1,200
96,000
P102,200

P200,000
100,000
40,000

P300,000
500,000
600,000
600,000
P2,000,000
340,000
P2,340,000
12%
P 280,800

BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 92
SUGGESTED ANSWERS
Chapter 12: Input VAT Credits and Refunds

Problem 12 16
1. Letter A
Total machines imported (P100,000 + P200,000 + P300,000)
Add: Excise tax (P600,000 x 50%)
Total
Multiplied by VAT rate
VAT paid on importation
2. Letter D
Output VAT (P1,000,000 x 12%)
Less: Creditable input VAT:
Machine 2 (P200,000 + P100,000) x 12%
Machine 3 (P300,000 + P150,000) x 12%
VAT payable

P 600,000
300,000
P 900,000
12%
P 108,000
P 120,000
P36,000
54,000

Problem 12 17
D
Actual input VAT (P896,000 x 20%)/9.333, higher
Transitional input VAT (P1,500,000 x 50%) x 2%
Total transitional input VAT allowed, the higher amount
Problem 12 18
A
Output VAT (P1,600,000 + P2,000,000) x 12%
Less: Other percentage tax paid
Output VAT balance
Less: Input VAT from purchases August to December
Transitional input VAT, (P100,000 x 2%) = P2,000; higher - actual
Net VAT payable

P19,200
15,000
P34,200

P240,000
34,000

Problem 12 19
B
Prime raw materials coconut for cooking oil (P1,000,000 x 3/5)
Multiplied by presumptive VAT rate
Presumptive input VAT
Problem 12 20
C
Output VAT (P2,800,000/9.333)
Less: Input VAT from
Presumptive input VAT sardines (P800,000 x 4%)
Supplies (P50,400/9.333)
Amortization of capital goods [(P1,232,000/9.333)/60] x 3 months
Net VAT payable
Problem 12 21
B
Output VAT (P600,000 + P1,500,000) x 12%
Less: OPT (P600,000 x 3%)
Output VAT balance
Less: Transitional input VAT (P100,000 x 2%)
Presumptive input VAT (P800,000 P200,000) x 4%
Net VAT payable

90,000
P 30,000

P432,000
48,000
P384,000
274,000
P110,000
P600,000
2%
P 12,000
P300,000

P32,000
5,400
6,600

P 2,000
24,000

44,000
P256,000
P252,000
18,000
P234,000
26,000
P208,000

Note: The basis of presumptive input VAT is the gross value of the purchased raw materials used
in the production.
Problem 12 22
C
Input VAT from purchases second quarter (P5,040,000/9.333)
Input VAT carry-over from first quarter

P540,000
57,000

BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 93
SUGGESTED ANSWERS
Chapter 12: Input VAT Credits and Refunds

( 6,000)
9,000
P600,000

Input VAT - Purchases returns (P50,000 x 12%)

Input VAT amortized on capital goods (P180,000/60) x 3
Creditable input VAT second quarter
Problem 12 23
D
Texas Instruments, Inc. (ECOZONE)
San Miguel Corporation
Department of Tourism
Low cost housing (P1,000,000 per house and lot)

P10M
15M
25M
50M
P100M

Input VAT on purchases

Less: Input VAT allowed:
Zero-VAT sales Texas Instruments (P3.6M x 10%)
Reg. VAT sales San Miguel Corporation (P3.6M x 15%)
Std input VAT Department of Tourism (P25,000,000 x 7%)
Input VAT not allowed

10%
15%
25%
50%
100%
P 360,000
540,000
1,750,000

Problem 12 24
B
Amount of input VAT allowed for VAT refund or
Issuance of TCC (P600,000 x 20/50) export sales or zero-rated VAT related
Problem 12 25
D
Input VAT from importation (P1,120,000/9.333)
Input VAT per VAT invoice issued
by nonVAT person (P896,000/9.333)
Total input VAT refund
Problem 7 26
A
Output VAT on actual sales [P400,000 + (P560,000/1.12)] x 12%
Add: Output VAT on deemed sales (P30,000 + P20,000) x 12%
Total output VAT
Less: Other percentage tax paid (P400,000 x 3%)
Output VAT balance
Less: Input VAT from:
Purchases (P672,000/9.333)
Input VAT previous quarter
Transitional input VAT
Input VAT carry-over
Problem 12 27
Contract price
Less: VAT withholding (P6,720,000/9.333)
Final withholding income tax (P6,000,000 x 7.5%)
Net remittance to Japan Inc.
Problem 12 28
Importation for business use
Add: Customs duties (P1,000,000 x 50%)
Total
Add: Excise tax (P1,500,000 x 10%)
Total
Multiplied by VAT rate
Creditable Input VAT

P3,600,000

2,650,000
P 950,000

P240,000
P120,000
96,000
P216,000
P108,000
6,000
P114,000
48,000
P 66,000

P72,000
42,000
2,000

P 720,000
450,000

116,000
(P50,000)
P6,720,000
1,170,000
P5,550,000
P1,000,000
500,000
P1,500,000
150,000
P1,650,000

12%
P 198,000

BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 94
SUGGESTED ANSWERS
Chapter 12: Input VAT Credits and Refunds

Problem 12 29
1. Output VAT (P1,456,000/9.3333)

P156,000

2. Input VAT (P1,120,000/9.3333)

P120,000

3. Net VAT payable (P156,000 P120,000)

P 36,000

Problem 12 30
1. Net income (P1,200,000/30%)
Add: Operating expenses (P2,540,000- P240,000)
Gross income
Add: Cost of sales (P3,360,000/1.12)
Less: Increase in inventory
Sales

P3,000,000
300,000

2. Output VAT (P9,000,000 x 12%)

Less: Input VAT from purchases (P3,360,000/9.333)
Input VAT from operating expenses
Input VAT from CIP:
Materials (P560,000 + P448,000 + P672,000)/9.333
Labor (P1,500,000 x 40%) x 12%
Overhead (P1,500,000 x 20%) x 12%
Net VAT payable
Problem 12 31
Non-VAT
Total sales as of November 1, 201B
Add: Sales on November to December 201B
(P672,000/1.12) + P100,000 = P700,000/70%
Total sales
Multiplied by VAT rate
Output VAT
Less: Other percentage tax paid
Output VAT balance
VAT-registered
Output VAT
Less: Other percentage tax paid
Output VAT balance
Less: Transitional input VAT
(P672,000/1.12) + (P100,000) = P700,000 x 2% = P14,000
(P672,000/9.333) = P72,000, higher + (P100,000 x 2%)
VAT advantage to register under VAT system

P360,000
240,000

P4,000,000
2,300,000
P6,300,000
2,700,000
P9,000,000
P1,080,000

180,000
72,000
36,000
P

888,000
192,000

P1,900,000
1,000,000
P2,900,000
12%
P 348,000
57,000
P 291,000
P
P

348,000
57,000
291,000
74,000

217,000
74,000

Alah Nganin should register under VAT system.

Problem 12 32
Output VAT (P5,000,000 x 12%)
Less: Input VAT from:
Supplies (P784,000/9.333)
Rent (P214,000/107%) x 12%
Creditable input VAT
from previous period
Presumptive input VAT
(P2,200,000 P200,000) x 2%
Net VAT payable

P600,000
P84,000
24,000
112,000
40,000

260,000
P340,000

BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 95
SUGGESTED ANSWERS
Chapter 12: Input VAT Credits and Refunds

Problem 12 33
Output VAT (P3,000,000 x 12%)
Less: Transitional input VAT (P100,000 x 2%)
Presumptive input VAT (P1,620,000 x 4%)
Input VAT from operating expenses
Net VAT payable

P360,000

P 2,000
64,800
3,600

70,400
P289,600

The presumptive input VAT is based on primary raw materials used. The primary raw materials
used during the period are computed as follows:
Copra raw materials, beginning
Add: Purchases of copra from farmers
Total
Less: Copra raw materials, ending
Copra raw materials used
Problem 12 34
Output VAT
Less: Input VAT from:
Purchases
Carry-over from last quarter
Capital goods (P180,000/60)
Creditable input VAT for next quarter

100,000
1,900,000
P2,000,000
380,000
P1,620,000
P200,000

P240,000
30,000
3,000

273,000
(P 73,000)

Problem 12 35
1. Input VAT from purchases for business (P112,000/9.333)
Input VAT from importation (P79,520/9.333)
Creditable input VAT for the period
Less: Output VAT
Input VAT carry-over

P 12,000
8,520
P20,520
20,000
P
520

2. Input VAT carry-over (P20,520 P20,520)

P - 0 -

Problem 12 36
Input VAT on Depreciable Capital Goods from purchase of
Truck (P1,120,000/9.333)
Processing machine (P1,568,000/9.333)/60 x 1
Total Input VAT for the last quarter

P120,000
2,800
P122,800

Note: The Input VAT from the purchase of truck should not be amortized because its cost does
not exceed P1,000,000.
Problem 12 37
Transitional input VAT
Presumptive input VAT
Input VAT on purchases of depreciable capital goods (P180,000 x 10/15)
Input VAT on operating expenses (P96,000 x 10/15)
Input VAT not allowed for TCC issuance

P 40,000
50,000
120,000
64,000
P274,000

Only input VAT that can be traced or allocated to zero-rated or effectively zero-rated is allowed for
issuance of TCC. Transitional and presumptive input VATs are not allowed for TCC issuance.

BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 96
SUGGESTED ANSWERS
Chapter 12: Input VAT Credits and Refunds

Problem 12 38
VAT invoice in the name of Busal Enterprises (P448,000/9.333)
NonVAT invoice charged with VAT (P313,600/9.333)
Total input VAT
Multiplied by percent of VAT for regular sales (P1M/P1.5M) = 2/3
Creditable input VAT from regular VAT sales

P 48,000
33,600
P 81,600
2/3
P 54,400

The input VAT on sales to government is subject to SIV and is deductible only from the Output
VAT on sales to the government. Its actual input VAT of P18,000 is not allowed to be deducted
from output VAT. (R.A. 9337)
Problem 12 39
Input VAT carry-over
Input VAT from purchases
Input VAT capital goods
Total
Less: Adjustments:
Input VAT on purchase returns
(P100,000 x 12%)
Input VAT on VAT-exempt sales
(P60,000 x 5/20)
Unamortized portion of input VAT
on capital goods
(P240,000 (P240,000/60)
Adjusted creditable input VAT

P 24,000
60,000
240,000
P324,000
P 12,000
15,000
236,000

263,000
P 61,000