Professional Documents
Culture Documents
(VAT)
Sec. 105 to 115
• Annual registration fee of P 500 for every separate and distinct establishments, or
place of business, including facilities which sales transactions occur.
• Date of payment – on or before January 31;
• Except: cooperatives, purely compensation individuals, OCW;
(Sec. 236A & B)
Registration – Requirements
Registration of each type of internal revenue taxes (Sec. 236C)
Transfer of registration (Sec. 236D)
Other updates (Sec. 236E)
Cancellation of Registration (Sec. 236F)
Written application
Gross sales or receipts, except those VAT exempt, for the following 12 months
will not exceed P 1,500,000 or
Cease business and do not expect to recommence any trade or business within
next 12 months.
Cancellation will take effect from the first day of the following month.
Who are liable? (Sec. 105)
- Any person;
- Sells, barters, exchanges, leases of goods,
properties, or render services in the ordinary
course of trade or business;
- Imports;
- Indirect tax;
- Rule of regularity.
VAT Registration – requirements
• When the taxpayer dies, the administrator or executor of the estate shall register
the estate of the decedent and a new TIN shall be supplied;
• In case of non – resident decedent, the administrator or executor of the estate shall
register the estate with RDO where he is registered; In case the executor or
administrator is not registered, registration of the estate shall be made with RDO
having jurisdiction over his legal residence.
• Any person who shall secure more than one TIN shall be criminally liable.
VAT Payable –
That beginning January 1, 2021, the VAT exemption shall only apply to sale of real
properties not primarily held for sale to customers or held for lease in the ordinary
course of trade or business, sale of real property utilized for socialized housing, sale of
house and lot, and other residential dwellings with selling price of not more than P
2,000,000;
To be adjusted every three years.
Thus, starting 2021, the law excluded residential lot and the low cost housing.
VAT EXEMPTIONS (Sec. 109 of Tax Code)
(P) continued…
Same seller with same buyer of an adjacent real property, subject to VAT if
exceeded the threshold amount;
Parking lot of the condominium unit is subject to VAT;
(Q) Lease of residential unit with a monthly rental not exceeding P 15,000…
(commercial unit is subject to VAT, regardless of the amount provided more than the
threshold)
If more than 15,000 and the receipts do not exceed P 3,000,000, subject to 3%
If more than 15,000 and receipts exceed P 3,000,000, subject to VAT.
VAT EXEMPTIONS (Sec. 109 of Tax Code)
Sec. 109 (Q). Lease of residential units with a monthly rental per unit not exceeding P 15,000.
Illustration 1: A lessor rents his 15 residential units for P 14,500 per month. During the
taxable year, his accumulated gross receipts amounted to P 2,610,000. (Not subject to VAT
and OPT)
Illustration 2: Same facts as above except that the accumulated gross receipts for the
taxable year is P 3,480,000. (Not subject to VAT and OPT)
Illustration 3:A lessor rents his 15 residential units for P 15,500 per month. During the
taxable year, his accumulated gross receipts amounted to P 2,790,000. (not subject to VAT
but 3% OPT)
Illustration 4: Same fact except accumulated gross receipts amounted to P3,720,000.
(subject to VAT)
For combined lease of residential units and commercial units, same rules as above apply.
VAT EXEMPTIONS (Sec. 109 of Tax Code)
(R) Sales, importation, printing, or publication of books and any newspaper, magazine,
review or bulletin which appears at regular intervals with fixed prices for subscription
and sale and which is not devoted principally to the publication of paid
advertisement;
(S) Transport of passengers by international carriers;
(T) Sale, importation, or lease of passenger or cargo vessel and air craft, including
engine, equipment, and spare parts thereof for domestic or international transport
operations.
(U) Importation of fuel, goods, and supplies by persons engaged in international
shipping or air transport operations PROVIDED TO BE USED FOR INTERNATIONAL
SHIPPING OR AIR TRANSPORT OPERATIONS.
(V) Services of banks, non-bank financial intermediaries performing quasi-banking
functions, and other non-bank financial intermediaries;
VAT EXEMPTIONS (Sec. 109 of Tax Code)
(W) VAT on purchase of SPECIFIED GOODS and SERVICES by a Senior Citizen (RA 9994)
AND VAT on purchase of SPECIFIED GOODS by a Person with disability (PWD) under RA
10754
(X) Transfer of property under Sec. 40C of the Tax Code;
(Y) Association dues, membership fees, and other assessments and charges collected
by homeowner’s association and condominium corporations;
(Z) Sales of gold to Bangko Sentral ng Pilipinas;
(AA) Sales of drugs and medicines prescribed for diabetes, high cholesterol, and
hypertension to beginning January 1, 2019 …
(BB) Section 116 of the Tax Code (VAT threshold)
VAT EXEMPT – Senior Citizen (RA 9994)
20% Senior discount and VAT Exempt;
Medicines including those for influenza and pneumococcal vaccines and such
other essential medical supplies, accessories and equipment;
Professional fees of attending physicians and health workers;
Medical, dental, diagnostic, and laboratory fees;
Domestic fare – land, air and water;
Hotels, restaurants, and recreation centers services;
Admission fees charged by theaters, cinema houses, concert halls, circuses,
carnivals, and other similar places of culture, leisure and amusement; and
Funeral and burial services of senior citizens.
VAT EXEMPT – PWD (RA 10754)
Hotels, restaurants, and recreation centers services
Admission fees charged by theaters, cinema houses, concert halls, circuses,
carnivals, and other similar places of culture, leisure and amusement.
Medicines in all drugstores;
Medical, dental, diagnostic, and laboratory fees;
Professional fees of attending physicians and health workers;
Domestic fare – land, air and water;
Funeral and burial services of PWD…
Exclude obituary publication and the cost of the memorial lot
Educational assistance to PWD
VAT EXEMPTIONS - others
Output Tax - Value added tax due on the sale of taxable goods, property and services by
any person whether or not he has taken the necessary steps to be registered.
Discounts and Allowances
• Sales returns and allowances, may be deducted from the gross sales
or receipts for the quarter in which a refund is made or a credit
memorandum or refund is issued.
Included in goods or properties –
• Real properties held for sale or held for lease in the ordinary
course of trade or business.
• Right or privilege to use the following:
a. patent, copyright, design or model, plan, secret formula or process,
goodwill, trademark, trade brand or other like property or right;
b. industrial, commercial or scientific equipment;
c. motion picture films, films, tapes and discs;
• Radio, television, satellite transmission, and cable television
time.
Zero (0) % VAT
• TIES
• Export sales
• Sale of goods, supplies, equipment and fuel to persons engaged
in international shipping or international air transport
operations, provided those will be used for international shipping
or air transport operations.
• Special laws or international agreements (treaties).
Transactions Deemed Sales
Inventories –
• Used for owner’s personal consumption;
• Consignment not sold after 60 days;
• Profit sharing;
• In payment of debt;
• Inventory on hand upon retirement from or cessation of business.
VAT – Properties (Cash vs. Installment)
• All importations;
• Basis of VAT (12%)
• Total value used by the BOC in determining tariff and custom
duties, plus custom duties, excise taxes, if any, and other
charges
• Landed cost-plus excise taxes, if any.
C. Accounting Requirements –
• Maintain a subsidiary sales journal and subsidiary purchase journal;
D. Erroneous VAT invoice/ official receipt –
• A non – vat registered person who issues VAT invoice / receipts showing his
TIN then followed by “VAT” shall be liable, in addition to OPT, to VAT
without the benefit of input taxes and pay 50% surcharge.
• The purchaser may still claim input taxes.
• A VAT-registered person who fails to write prominently the term “VAT
exempt” shall be liable to VAT as if not exempt.
Compliance Requirements (Sec. 237 Tax
Code)
A. Issuance of Receipts or Sales or Commercial Invoice
• Required when each sale and transfer of merchandise or for services rendered
amounts to P 100 or more.
• Electronic receipts or sales or commercial invoice shall be issued by the
taxpayers engaged in export, e – commerce, and those under the jurisdiction
of large taxpayers within 5 years from the effectivity of the TRAIN LAW.
• Other taxpayers at their option may issue electronic receipts in lieu of manual
receipts, sales or commercial invoices.
• The original receipts or invoices shall be given to the purchaser while the
duplicate shall be kept by the seller. All these documents shall be kept within
3 years from its issuance.
Compliance Requirements (Sec. 238 Tax
Code)
Printing of Receipts or Sales or Commercial Invoices –
• Authority to Print receipts or sales or commercial
invoices (ATP) must be secured;
• Logbook/ register of taxpayers who availed of the
printing services.
Other Compliance Requirements -