How to compute Value Added Tax Payable

Value Added Tax Payable is normally computed as follows:

1. Computing Net VAT Payable on VAT “exclusive” Sales/Receipts

Total Output Tax Due or Total Vatable Sales/Receipts x 12%

Less: Total Allowable Input Tax or Total Vatable Purchases x 12%
Equals: VAT Payable

Sample Computation of VAT Payable:

Let’s assume that,
Total Vatable Sales (VAT exclusive) = P100,000
Total purchases with VAT receipts (VAT exclusive) = P70,000

P100,000 x 12% or P12,000

– P70,000 x 12% or P8,400
VAT Payable = P3,600

2. Computing Net VAT Payable on VAT “inclusive” Sales/Receipts

Total Output Tax Due or Total Vatable Sales / 1.12 x 12%

Less: Total Allowable Input Tax or Total Vatable Purchases / 1.12 x 12%
Equals: VAT Payable

Sample Computation of VAT Payable:

Example based on the above assumption:

Total Vatable Sales (VAT inclusive) = P112,000
Total purchases with VAT receipts (VAT inclusive) = P78,400
P112,000 /1.12 x 12% or P12,000
– P78,400 /1.12 x 12% or P8,400
VAT Payable = P3,600

Or an alternative computation:

P112,000 /9.333 or P12,000

– P78,400 /9.333 or P8,400
VAT Payable = P3,600