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EXERCISES 15-1.

DISCUSSION QUESTIONS
1. The introduction of value-added tax has simplified the business tax system in the
Philippines because:
a. It has abolished various traditional business taxes and were replaced by one
only;
b. It has eliminated more than 60 tax rates and replaced them by only two - 10%
and 0%.

2. The scope of value-added tax are the following transactions:
a. Any sale, barter, or exchange of goods and properties, or similar transactions, in
the course of trade or business;
b. Any sale of services, or similar transactions, in the course of trade or business;
c. Any lease of goods and properties, or similar transactions, in the course of trade
or business; and
d. Any importation of goods, whether in the course of trade or business or not.

3. The value-added tax is payable by the seller and not by the purchaser of goods. But
being an indirect tax, it can be added to the cost of goods purchased, not as tax but
as additional cost which the purchaser has to pay to obtain the goods purchased.
Hence, Mr. Libre cannot invoke tax exemption privileges to avoid the passing or
shifting of the VAT by the supplier of goods purchased by him (BIR Ruling No. 91-151).

4. On the assumption that neither of the two businesses are registered under the VAT
system, then both of them are exempt from VAT because neither of them exceeds
the threshold of an annual gross sales of P1,500,000.
However, if anyone of them is VAT registered, then it shall be subject to VAT.
An unregistered VAT business shall be subject to VAT provided that the
following requisites are satisfied:
a. That it is not granted exemption by the code or special law; and
b. The gross annual sales or receipts exceeds P1,500,000.

5. No. For purposes of the threshold of P1,500,000 the husband and the wife shall be
considered as separate taxpayers.
However, the aggregation rule for Pepe shall apply. Thus, the gross receipts
from the practice of his profession and the revenue from business shall be
combined for purposes of determining whether the threshold has been exceeded.
Considering that the aggregate gross receipts of Pepe does not exceed the
P1.5 million threshold, he is not subject to VAT.

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