Professional Documents
Culture Documents
Tweet
58
Like
Share
Share
A Corp. sold P1,000,000 worth of goods plus 12% VAT or P120,000 to Government Agency
(GA). Upon payment of GA to A Corp., GA will withhold the 5% or P50,000 (P1,000,000
multiplied by 5%), so it will only pay P1,070,000.00 (P1,120,000 less P50,000) to A Corp. A
Corp. will no longer pay or remit the Bureau of Internal Revenue (BIR) the P70,000 (P120,000
less P50,000) because the P50,000 withheld by GA constitute final VAT on sales to government
in the Philippines.
Since the seller will effectively pay the 5% out of the 12% value added tax on sales to government, the 7%
(12% less 5%) effectively accounts for the standard input VAT in lieu of actual input VAT. The question
now is – How about the actual input tax on purchases of the seller for goods or services used in sales to
government? Such actual input tax attributable or ratable (for those with mixed transactions) to sales to
government will no longer be deducted against the output VAT on other regular sales because the standard
input VAT will take their place. Said actual input VAT attributable or ratable to government sales shall not
also be carried over to succeeding months or quarters, not an outright input VAT expense, and not allowed
to be claimed for refund and tax credit certificates. Instead, such actual input VAT are closed to the
standard input VAT in the books of account of the VAT-registered taxpayer in the Philippines and any
difference treated as follows:
If actual input VAT exceeds standard input VAT, input VAT expenses; or
If actual input VAT is less than the standard input VAT, closed to expense or cost.
A Corp. sold P1,000,000 worth of goods plus 12% VAT or P120,000 to Government Agency
(GA). In making such sales to government, A Corporation’s purchases totaled P625,000 plus
12% VAT of P75,000.00.
As a sale to government, A Corp. will not compute VAT due and payable at P45,000 (P120,000
less P75,000). With the 5% or P50,000.00 final VAT withheld by GA, the P75,000.00 input VAT
will not be deducted from the P120,000 output VAT on sales to GA or on other VATable sales of
A Corp. Instead, it will be closed in the books of accounts of A Corp. as input VAT expense of
P5,000 (P75,000 actual less P70,000 standard). On the other hand, assuming the actual input
VAT is only P60,000, then closing the actual input VAT in the books will result to a reduction of
expense or cost, or simply other income of P10,000 (P60,000 actual less P70,000 standard).
Related Seminars
Join our VAT seminars to learn more about Value Added Tax in the Philippines
Disclaimer: This article is for general conceptual guidance only and is not a substitute for an
expert opinion. Please consult your preferred tax and/or legal consultant for the specific
details applicable to your circumstances. For comments, you may please send mail at
info@taxacctgcenter.org.)
Seminar Schedules
September 2016
September 8-9, 2016 Thursday & Friday - Basic Business Accounting and BIR VAT Compliance
Seminar Workshop
September 10, 2016 Saturday- BIR Returns & Reports Preparations under eBIR and Online Submissions
Seminar
September 15, 2016 Thursday- How to Register Philippine Business Entity, Seminar
September 16-17, 2016 Friday & Saturday - Basic Business Taxation Simplified
September 24, 2016 Saturday - Compensation: Computations and Must Know Exemptions
September 29, 2016 Thursday - BIR Examination: Their Procedures and related Defenses
October 2016
October 1, 2016 Saturday- BIR Returns & Reports Preparations under eBIR and Online Submissions
Seminar
October 6-7, 2016 Thursday & Friday - Basic Business Accounting and BIR Non-VAT Compliance
Seminar Workshop
October 15, 2016 Saturday - Compensation: Computations and Must Know Exemptions
October 21, 2016 Friday - How to analyze audited financial statements & Accounting for Management
October 21, 2016 Friday- PEZA Registered Entities: Tax Compliance – Seminar
October 21, 2016 Friday - How to analyze audited financial statements & Accounting for Management
October 22, 2016 Saturday - BIR Examination: Their Procedures and related Defenses
October 27-28, 2016 Thursday & Friday - Basic Business Accounting and BIR VAT Compliance Seminar
Workshop
Contact Us
Phone :
(02) 894-2608
(02) 348-2193
Mobile :
(+63)922-856-2358
Email : info@taxacctgcenter.org
Government Links
Affiliates
Newsletter Sign Up
Subscribe