INPUT AND OUTPUT TAX (B) Excess output or input vat

Output tax exceeds input vat (Net VAT payable): the taxpayer
SEC 110. TAX CREDITS will pay the excess
Input tax exceeds output vat (Excess tax credits): the excess
Input tax- shall mean the VAT due from or paid by a VAT-registered shall be carried over to the succeeding quarter/s; in case of 0 rated
person in the course of his trade or business for the importation of sales, the excess may be claimed as a refund or credit against other
goods or the local purchase goods or services, including lease or use of internal revenue taxes.
property, from a VAT-registered person.
- includes transitional input tax and presumptive input tax (C) Determination of input or output tax
Output tax:
Output tax- shall mean the VAT due on the sale or lease of taxable Exclusive of VAT: GSP or GR x 12%
goods or properties or services by any person registered or required to Inclusive of VAT: GSP or GR x 12%/112%
register under Sec 236 of this Code.
Input tax:
(A) Creditable input tax Input tax during the month/taxable quarter (sources if input tax)
+ input tax carried over from the preceding month or quarter
(1) Input tax evidenced by VAT invoice or receipt shall be less: purchase returns or allowances, tax refund or credit, input tax
creditable against output tax from exempt sale and other adjustments

Sources of input tax: Tax credit- does not only include those filed with the BIR but also
(a) Purchase or importation of goods: with other gov’t agencies.
(i) For sale;
(ii) For conversion into or intended to form part of a finished SEC 111. Transitional/Presumptive input tax credits
product for sale, including packaging materials;
(iii) For use of supplies in the course of business; Transitional input tax: for newly VAT-registered persons, they shall
(iv) For use of materials supplied for sale of services; be allowed a transitional input tax on his beginning inventory of
(v) For use in trade or business for which deduction for goods, supplies and materials
depreciation or amortization is allowed under this Code. - subject to the filing of inventory according the RR prescribed by the
(b) Purchase of services on which VAT has been actually paid. Secretary of Finance, upon recommendation of the Commissioner
(c) Purchase of real properties for which VAT has been - to alleviate the impact of VAT
actually paid. Rate: 2%
(d) Transactions deemed sale Basis: whichever is higher between the value of such inventory or the
(e) Presumptive input tax actual VAT paid on such goods, materials and supplies
(f) Transitional input tax
Presumptive input tax: persons engaged in the processing of
(2) Who can avail? mackerels, sardines and milk, and in manufacturing refined sugar and
(a) The purchaser upon consummation of sale and on importation cooking oil shall be allowed a presumptive input tax
of goods or services; and Rate: 4%
(b) The importer upon payment of VAT prior to the release of the Basis: value of money of their purchases of primary agricultural
goods from the custody of the BOC. products which are used as inputs to their production
(c) In case of services, the purchaser, lessee or licensee upon - primary agricultural products are VAT exempt
payment of compensation, rental, royalty or fee - Processing means through physical and chemical process, the
exterior texture or form or inner substance of a product is altered
Amortization:
(1) Capital good with aggregate acquisition cost exceeding 1M: SEC 112. Refunds or tax credits of input tax
(a) With estimated life of 5yrs or more: input tax shall be spread
evenly over a period of 60mos (starting at the month of (A) Zero-rated or effectively zero-rated sales
acquisition) Who may avail?: VAT-registered persons whose sales are zero-
(b) With estimated life of less than 5 yrs: spread evenly over such rated or effectively zero-rated
a shorter period Period: within 2yrs after the close of the taxable quarter when the
(2) Capital good with aggregate acquisition cost not exceeding sales are made (regardless of whether said tax was paid or not)
1M: input tax shall be credited against output tax in the month of What: apply for the issuance of a certificate of tax credit or refund
acquisition of creditable input tax due or paid attributable to such sales, except
transitional input tax, to the extent that such input tax has not been
*Starting Jan. 1, 2022: No more amortization, the unutilized input applied against output tax
VAT of a VAT-registered person shall be allowed to apply the
same as scheduled until fully utilized (outright claim on the month RE: persons engaged in transactions that are zero-
of purchase) rated/effectively zero-rated and taxable or exempt which the
amount of creditable input tax cannot be directly attributed to
(3) VAT-registered person who is also engaged in VAT- any one of the transactions
exempt transactions shall be allowed tax credit as follows: - the input tax shall be allocated proportionately on the basis of
volume of sales.
(a) The total input tax which can be directly attributed to
transactions subject to VAT RE: persons engaged in the transport of passengers and cargo
- provided that the input tax directly attributable to VAT taxable by domestic air or sea vessel from PH to a foreign country:
sale of goods and services from the Government, its political - input taxes shall be allocated ratably between his zero-rated and
subdivisions, agencies or instrumentalities, including GOCCs, non-zero-rated sales.
shall not be credited against output taxes arising from sales to non-
government entities. (D) Cancellation of VAT Registration
Who may avail?: persons whose registration has been cancelled
(b) A ratable portion of any input tax which cannot be directly due to cessation of or retirement from business or due to changes
attributed to either activity in or cessation of status
- only that ratable portion of input tax pertaining to transactions When: within 2yrs from the date of cancellation
subject to VAT may be recognized for input tax credit What: apply for issuance of tax credit certificate for any unused
input tax which may be used in payment of his other internal
*Input tax attributable to VAT exempt transactions are part of cost revenue taxes
or expenses Date of cancellation: date of issuance of tax clearance by the
BIR, after full settlement of all tax liabilities relative to the
 cessation of business or change of status (a) In addition to percentage tax, he shall be liable to:
(i) Tax imposed by sec 106 or 108 if this code, without the benefit
(E) Period within which refund of input taxes shall be made of input tax
- The Commissioner has 90 days from the date of the submission (ii) 50% surcharge
of official receipt or invoice and other documents in support of the (b) The purchaser may recognize the VAT as input tax credit if the
application to grant or deny the claim (Administrative Claim) information required under subsection (B) is shown on the invoice
- In case of full or partial denial, the taxpayer may within 30 days or receipt.
from receipt of denial, appeal before the CTA Division (Judicial
Claim) (2) If a VAT-registered person issues a VAT official receipt or
*The Commissioner, in case of denial shall state in writing the VAT invoice for a VAT exempt transaction, but fails to display
legal and factual basis of such denial prominently the words “VAT-exempt sale” then he shall be
- Failure to act on the application on the part of the Commissioner, subject to tax imposed under sec 106 o 108
the official, agent or employee of the BIR shall be punished under
Sec. 269 SEC 114. RETURN AND PAYMENT OF VAT

CIR - CTA DIV.- MR- CTA EN BANC - MR - SC (A) General

*MR- within 15 days from receipt of denial Return; When filed: the VAT taxpayer shall file a quarterly
return within 25 days following the close of the taxable quarter
*Only the administrative claim that must be filed within the 2yr Payment; when made: VAT shall be paid on a monthly basis
prescriptive period Starting Jan. 1, 2023: filing and payment shall be done within 25
days following the close of taxable quarter
(F) Manner of giving refund
Cancelled registrations: Any person whose registration is
Refund shall be made upon warrants drawn by the Commissioner
cancelled, the filing of return and payment shall be made within 25
or by his duly authorized representative
days from the date of the cancellation of registration.
- no need to be countersigned by the Chairman, CoA
- provided, that only one consolidated return shall be filed by the
- refunds under this par. Shall be subject to audit by the CoA
taxpayer for his principal place of business or head office and all
branches
COMPLIANCE REQUIREMENTS
(J) Where to file return and pay the tax
SEC 113. INVOICING AND ACCOUNTING REQUIREMENTS - AAB, RCO or duly authorized city or municipal treasurer in the
FOR VAT-REGISTERED PERSONS PH located within the revenue district where the taxpayer is
registered or required to register
(A) Invoice requirements
VAT invoice: for every sale, barter or exchange of goods or (K) Withholding of VAT
properties - The Gov’t, its political subdivisions, agencies or
VAT receipt: for every lease of goods or properties and for every instrumentalities, including GOCCs, shall before making payment
sale, barter or exchange of services on account of purchases of goods and services subject to
12%VAT, shall deduct and withhold a final VAT at the rate of 5%
of the total gross payment thereof
(G) Information contained in the VAT invoice/receipt:
- Starting Jan. 1, 2021, the VAT withholding system shall shift
from final to creditable system
(1) A statement that the seller is a VAT-registered person,
followed by his TIN
- Payment for lease or use of properties or property rights to
(2) The amount which the purchaser pays or is obligated to pay to
nonresident owners shall be subject to 12% WT at the time of
the seller with the indication that such amount includes VAT.
payment
Provided, that:
(a) The amount of tax shall be known as a separate item on the
- Payments for purchases of goods and services arising from
receipt or invoice
projects funded by ODA - not subject to FWT
(b) If the sale is exempt from VAT, the term “VAT exempt sale”
shall be written or printed prominently on the invoice or receipt
- payor or person in control of payment shall be considered as the
(c) If the sale is subject to 0% VAT, the term “zero-rated sale”
withholding agent; the VAT withheld shall be remitted within 10
shall be written or printed prominently on the invoice or receipt
days following the end of the month the withholding was made
(d) If the sale of goods or properties some of which are subject to
and some of which are VAT exempt or VAT zero-rate, the invoice
SEC 115. POWER OF THE COMMISSIONER TO SUSPEND
or receipt shall indicate a breakdown of the sale price between
BUSINESS OPERATIONS OF A TAXPAYER
taxable, exempt or zero-rated components and the calculation of
VAT on each portion shall be known
Commissioner or his authorized representative is empowered to
- The seller may issue separate invoices/receipts for the taxable,
suspend business operations or temporarily close business
exempt or zero-rated components
establishments of any person for the ffg violation:
(3) The date of transaction, quantity, unit cost and the description
of goods or properties or nature of services
(1) In case of a VAT-registered person
(4) If the sale is in an amount of 1000 pesos or more, and the
(a) Failure to issue VAT invoice or official receipt;
purchaser is a VAT-registered person, his name, business style, if
(b) Failure to file a VAT return
any, and TIN shall be indicated
(c) Overstatement of taxable sales or receipts by 30% or more of
his correct taxable sales or receipts for the taxable quarter
(H) Accounting requirements (2) Failure of any person to register as required by sec 236
In addition to the regular accounting records acquired, VAT-
registered persons shall maintain a subsidiary sales journal and Temporary closure shall be for the duration of not less than 5 days and
subsidiary purchase journal on which the daily sales and purchases shall be lifted only upon compliance with any requirements prescribed
are recorded. by the Commissioner
- the subsidiary journals shall contain such information as may be
required by the Secretary of Finance.

(I) Consequence of erroneous VAT invoice or VAT official receipt

(1) If a person who is not a VAT registered person issues

receipt or invoice showing his TIN, followed by the word
“VAT”: