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    Business and Transfer Taxation

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    BAM 208 CHAPTER 1

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    Business and Transfer Taxation

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    282 views11 pages

    Bam 208 Chapter 1

    Uploaded by

    Maricris
    Business and Transfer Taxation

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 11
    Chapter 1- Introduction to Consumption Taxes INTRODUCTION TO CONSUMPTION TAXES Chapter Overview and Objectives Business tax is a form of consumption tax. An understanding of consumption tax is essential to your understanding and appreciation of business taxes. This chapter provides an overview of consumption tax. After this chapter, readers are expected to comprehend: ‘The concept of a consumption tax Types of ‘consumption and consumption taxes ‘The destination principle The nature of the VAT on importation The nature and types of business tax The characteristics of the VAT on sales The characteristics of percentage tax oe ‘THE CONCEPT OF CONSUMPTION AND CONSUMPTION TAX Consumption refers to the acquisition or utilization o utilization of goods or services may be through purchase, or other means. This utilization is subject to a tax called NOR eeyE to the pul he purchas¢ Consumption is levied without regard f i whether it is for business, personal or charity use. e of Consum 1. Savings formation 2. Rationalization of the Benefit Received Theory 3. Wealth redistribution to society ‘oward consumption. Income less consumption | that is useful in funding projects crucial to pur further economic development. A tax on ation by limiting the level of Income is normally destined is savings. Savings is a capita economic activities that could s consumption promotes savings form consumption. (consumption tax rationatizes the Benefit Received Theo y The Benefit Received Theory pro ab pose ‘from the government s, It is undeniable that, in one way or another, every resident or citizen, whether rich or poor, benefits Scanned with ComScanner fon to Consumption Taxes ic services. Thus, the legal trusm in tay, Chapter 1 ~Introduct rment is conclusively presumed, yment’s publ from the govern etl steer em ent tax everybody? Every person, rich oF po, So how cul he BVT mal prt off This trie even ge donot earn eat ‘ynsumption tax isa practical ratfonalizat erefore, const pale ed Tear nx istribute wealth to society So everyone in yy > policy to redi Ieisa basic state pol State could enjoy the same, e's no question that rich people buy or sp. On te individual lee cy biger income and wealth the rich can ate more than poor Pop consumption wil efectvly mae the ihp expertnes fr the government. rts the redistribution of wealth fom consumption tax supp! ri : In fle oreo peed members of our Society. tion ax seam, wang cee ac necessities such , 5 levied upon basi reed be tantamount to killing the goose that lays th ars Income tax vs. consumption tax Chapter 1 - Introduction to Consumption Taxes ‘TYPES OF CONSUMPTION Domestic consumption | Foreign consumption seller (Guyer = Resident). | (Buyer = Non-resident) | = Resident = sellers ‘SELLER Buyer Salesor™._Purchse recs ™ BUYER = Non-resident ~ sellers importer | Tapore Sale Philippines Abroad “Types of consumption | Purchaser Status Z_Domestic consumption-| Resident Taxable 2._Foreign consumption —| Non-resident | Brenpt/Bfectveynan-taxable c Tncome tax Consumption tax Tax upon receipt of | Tax upon usage of income fone ‘income or expt ‘taxto the capable A taxtto all /eoverage Seer bu [ Ability to pay theory | Benefit received theay | toreaders Moe ere appreition of the following section shghy erica to you understanding of rules on consumption taxes in future chapters. tly territorial, our government can only impose mn. In observing this, our tax laws adhere to es Only goods and services destined for consumption in the Philippines are subject to consumption tax while those destined for consumption abroad are not subject to consumption tax. Because taxation is inh Following toe erasebomleidoa, ‘goods that cross the border destined for foreign countries are not charged consumption taxes. Due to this, the government donot impose taxes Onvexports, The NIRC efter exeinps exports or subject them to a 0% tax rate, ‘TYPES OF DOMESTIC CONSUMPTION AS TO SOURCE 41. Domestic sales purchases from resident sellers 2. Importation - purchases from abroad by non-residents CONSUMPTION TAX ON DOMESTIC SALES ‘The domestic consumption of resident buyers from resident sellers commonly known as purchase is subject to a consumption tax called a business tax. It is called business tax because the consumption tax is indirectly imposed upon sellers which are businesses. This does not mean, however, that the sellers are the ones being subjected to the tax burden. The object of taxation is the purchase of buyers but owing to the inherent difficulty of collecting tax from numerous buyers compared 3 Scanned with Camscanner Chapter 1 Introduction to Consumption Taxes aw imposed the obligation to pay the tx upon set, | to fewer sellers llr ae just the same purchases of buyers Which gS the real object of taxation. == h fo) TAX ON IMPORTATION \] ‘CONSUMPTION ; sons ieatc consumption of goods or services from nonstesident sae rae don Known as importation is subject to a consumption tax elle VAT on importation” levied upon the buyer ~ importer. The principle g ity cannot be applied in this case because seller aamineifent and is out of Feach of Philippine’s taxing power. It must i onced that taxation is territorial; hence, tax obligations can only je Terorced and demanded upon residents ~ in this case, the buyer, ‘The VAT is directly I administrative feastbil [BUSINESS TAX VS. VAT ON IMPORTATION: A DIFFERENTIATION ‘VAT on Importation” |" Business Tax “Scope oftax Imports from business | Purchases from ornon-business | businesses only ‘of consumption tax Pure form Relative form ‘Statutory taxpayer Buyer Seller ‘The economic taxpayer Buyer Buyer: ‘Nature of imposition Direct Indirect Basis of tax Total purchase cost | Sales or receipts | “The business tax is imposed only ifthe seller is a business and is based upon the sales of goods or receipts from rendering of services of the seller. Thats ‘why this consumption tax came to be known as a “business” tax but itis not actually a tax upon the business because the tax burden is shifted by the business to the buyer who will actually shoulder the tax burden. Business refers to habitual engagement in a commercial activity, It connotes ‘regularity of transaction involving sale of goods or services for a profit. ‘The VAT on importation is imposed upon the total cost of importation regardless of whether or not the non-resident seller is a business. Its therefore a pure form of consumption tax as it does not relatively apply the tax jon Taxes ‘chapter 1 Introduction to Consumptios ; , se the VAT on importation an impasse to administrative feasbyC Te sane is no. The government has an in-placed border contr Ce Zontrol on goods is managed by the Bureau of Customs (BOC), Cooter es fe leared through the HOC fist before they are ae A ren Philippines. With this in-placed control mechanism, the pa ear tent collecbie through the BOC. Thus, the la tasked the BOC \ collect the tax in behalf ofthe BIR. \ nusiness tax rules on domestic sales [The seller is The buyer is Subject to business tax? ines Bisines Busnes Not busines YES ot business | Business NO Hot business | Not business NO Value Added Tax rules on importation Theselloris | ~The buyer is | “Subject lo VAT on Importation? Busnes Bisines. YES Busines Not busine Yes Not bisings [Business YES [Notbusiness | Not busines YES It must be noted that being in business is very essential to business taxation ‘while it is not the case with importation. So long as there is importation of goods or services, the VAT generally applies. "TYPES OF CONSUMPTION TAXES 1, Percentage Tax - tax of various rates from 0.60% to 30% 2. Value Added Tax ~ a consumption tax of 12% 3, Excise Tax - an ad valorem or specific tax, which is imposed in addition to VAT or percentage tax, only on certain goods or services ‘TYPES OF DOMESTIC CONSUMPTION AS TO TAXABILITY 4, Exempt consumption ~ These are consumption of goods or services that are not subject to consumption taxes. 2. Consumptions specifically subject to percentage tax - ‘This includes consumption of services that are not subject to VAT but are imposed with a specific percentage tax. 3. Vatable consumption ~ ‘This includes all other consumption that are neither exempted nor subject to percentage tax. 5 Seanned with Camscanner ces = Introduction to Consumption Taxes Introduction to Consumption Taxes ‘Types of Consumption Per Type of Domestic Consumption chapter 1= _— am [anenpcipone | Domestics err enn mcr] | Sahel ns | tunes so Beanpransumpten | Senne Seem sales rece current domestic consumption. of persons engaged in business OPT ee ee sania mae a} SE = ——— : a Vatablesales or ree) Pa A argent person from non-resident PESOS, UT ore Te ioe coe EXEMPT CONSUMPTION . EXE onsumpins are neither subject to percentage 2X nor value adie Exempt ay are sourced from abroad, they are exempt from VAT q, ex atom If sourced from within, they re exempt from business tax, from consumption tax | Basis of exemption Gasisofexemption | VAT on Importation |" Business Tax “The goods imported is a | The goods, services or Haman necessity | human necessity. property sold isa human necessity, Theimportation does | The seller isnot ‘outofscopeoftax | notconstitutea engaged in busines. domestic consumption. ‘The importation is | The sales or receipts Tax incentive exempted as a tax exempted asatax Incentive tocertain | incentive to certain importers. sellers Taternationalcomity | Theimportations | The sales or receiptis exempted by treaty. | _ exempted by treaty. Certain basic necessities such as natural agricultural or marine food products, agricultural inputs, books, newspapers and magazines, residential properties; and essential services such as residential rentals, educational serves of choo and meal services of hospitals are exempt. Taxation ‘shall not result in Killing the goose that lays the golden egg. In principle, these consumables are not taxable. ee ‘Note the scope ofthe following consumption taxes: jorts to the Philippines his ts or effects. This is not a ig these goods. They are joods into the non-resident person imp« 1d professional instrument because he is not acquirin fore he brought (imported) the g pt from VAT on importation. ‘An example is when a personal, household anc domestic consumpti already his even bel Philippines. Itis therefore exemy ‘Scope of Business Taxes Only sales or receipts of persons e tax. Hence, if the seller of goods or business tax. to business gaged in business is subject ron there is no services is not a business, ‘Tox incentives Tax ain importations are not subjected to the VAT on importation for some coer Example is the exemption on the importation of vessels or aircraft in an effort of the government to assist or improve domestic air or sea transport or assist tourism in the Philippines. Certain institutions are not subjected to business taxes for some reasons. Example is the exemption of cooperatives in a bid for the government to promote cooperative undertaking as it is instrumental in economic developments benefiting most rural poor. Importation or sales of goods or services that are agreed to be exempted in ‘an international agreement to which the Philippine government is a ‘Signatory are exempt from the VAT on importation and business tax, respectively. ‘SERVICES SPECIFICALLY SUBJECT TO PERCENTAGE TAX, Services specifically subject to percentage tax are taxable consumption of ‘services but subject only to a specific percentage tax rate set by the NIRC. Consumption of these services are not subject to VAT. 7 Seanned with Camscanner auction to consumption TxeS Chapter 1~ it s PATION OR SALE: \VATABLEIMPORTATION OFF ei other importation All other ia cfcally imposed a Per exempted or sped srs carly uerstand the following struct) vised 0 careily structs Readers are highly 3 ther goods or services that centage taxis vatable,—* M VAT on importation Percentage tax ithholding VAI Import of services ‘The import of service is either: a exempt 1 Subject to percentage tax 2 Subject to final withholding VAT sof services by certain VAT-exempt person Is exempt from Va erty one import of service that is subject to percent case Import of other services is subject to VAT called the fe 12 olding VAT" The VAT is computed as 1236 of the contact price of th services and is paid to the BIR. ‘The impor Currentiy, Import of goods The import of goods is elther: a. Exempt Subject to VAT on importation Ifthe import of goods is not exempted, the importation is subject to VAT on importation. The VAT on importation is computed as 12% of the landed cost | ‘of the goods and is paid to the BOC. ‘The Structure ofthe Business Tax : Business Tax Salesofservices. | 11 Salesofgoods 1 [ Brenpt Exempt receipt ‘Exempt sales | Receipts specifically - subject toa 9% tax iz 7AT Vatable receipts Vatable sales fF | ee Chapter 1 ~ Introduction to Consumption Taxes Sales of services ‘The receipt from the sale of services is either: a. Exempt b. Specifically subject toa percentage tax c. Vatable \ Sales of goods ‘The sales from the sale of goods is either: a. Exempt b. Vatable taxpayer is a VAT ct to 12% VAT if the jer ig a non-VAT Vatable sales or receipts are subj ge tax if the taxpay taxpayer and to a 39% general percenta taxpayer. Tosumup.readersmustnotethefolowing ‘Meaning _ Exempt sales or receipis_| Exempt to VAT and percentage tat ae spediicaly | Subject a particular percentage tax and subject to 96 tax isexempt from VAT -Jatubie sales or receipts | Subject to either VAT or 396 percentage t= @ VAT on Sales in Business Tax ‘directly computed on the landed costs or total ‘without any deduction or tax credit. VAT on Importation vs. ‘The VAT on importation is purchase costs of importation “The VAT imposed on sales or receipt in business taxation is unique as it is Tosctically imposed onthe value added - the amount of mark-up imposed by sellers on theit purchase costs. The VAT on sales or receipt follows 2 by Sitiethod wherein a VAT of 12% is imposed on sales and is reduced by \VAT paid by the business on its purchases. ‘The tax due is computed as: Output VAT (12% of sales or receipts) Less: Input VAT (1296 VAT paid on purchases) VAT due Bx Input VAT is claimed as tax credit against output VAT when due or paid not Jd, The VAT does not require a perfect matching when goods are sol lpproach; hence itis not imposed on the gross profit. P xoqo0e sear ‘This feature of the VAT on sales or receipts is unique compared to f sales or percentage tates which is merely computed asa fixed percentage o receipts. 9 ‘Scanned wih CamScanner Chapter 1 — introduction to Consumption Taxes The Excise Tax . ease sed onthe consumption of commodities such as; 4. sin products such as alcohol and Cigarettes & Sin products jeommodities, such as automobiles and jewelry | non-essential services, suchas cosmetic SUrBETy 4. products which are environmentally degrading Sensumption, such petroleum and minerals itional imposition to VAT or percentage tax. ty tage taxes and VAT on sales or receipts wi encise tax levied a the point of produey ® 5 ble goods is normally imposed before the goo thelr importation by importers. *t thelr production Excise tax is an ad business taxes such as percen are levied at the point of sales, importation. ‘The excise tax on excisal sold by domestic producers oF upon 10 Chapter 1 Introduction to Consumption Taxes (CHAPTER 1: SELF-TEST EXERCISES, —— Discussion Questions |. What is consumption? Compare consumption tax to incor ‘Whatare the types of consumption: Discuss the nature of business tax. Enumerate and describe the nature of each type of business ta%- ‘Compare the VAT on importation to the business ta. Discuss the characteristis ofthe VAT on sales. Compare the direct method to the tax credit method in VAT computation. Discuss the characteristics of the percentage tax. ). Discuss the nature of excise tax. | Compare VAT on sales, percentage tax, and excise tax: me tax. 1? Which type pays tax? Nopaey ‘True or False 1 ‘Consumption tax sa tax levied upon businesses. 2, Apurchase isa form of consumption. 3, Atax on consumption will effectively causes all tax 4. Consumption is the acquisition or utilization of goods and services. 5, Income tax is based on the taxpayers’ capacity to sacrifice for the support of the government. Consumption tax Is more consistent with the “ability to residents of the state to pay pay” theory rather 6. than the “benefit received” theory. 7. Atax on consumption would support savings Initiative. 8. Consumption taxes should not apply to basic necessities. 9, Both domestic consumption and foreign consumption are subject to consumption tax. 10, Non-resident sellers are exempt from consumption taxes on thelr domestic sales. 11, Resident sellers shall pay consumption tax on foreign consumption. 42, The sale by non-resident persons abroad Is subject to Philippine consumption tax. 13, The utilization or consumption of goods or services shall be taxable in their country of origin. 14. The sale by non-resident persons in the Philippines 1s exempt from consumption tax. 415. The sale by resident inthe Philippines Is subject to consumption tax. ‘True or False 2 1. The consumption tax for purchases of goods or services from foreign sources shall be payable by the buyer. 2, Business taxisa form of consumption tax. 3. Consumption tax isa form of business tax. 1 ‘Scanned with Camcanner chapter 1~ Introduction fo consumetion TaXSS Je pecress tas mosed on the sales of lens WHI IS He Putchasey, b. Business taxis . by buyers raion is payable only by those relay engaged yy Berean eo PI ae hee 7. The statutory taxpaye ‘on importation. VAT on import200" tly included in the price of goods and services g, th a. Bune oesar us Buss tes at py let the govern ye ayer innate ecONOMCapaye, tax isan indirect tax. tie 14. Domestic sellers pay consumption tax to the government. ‘Multiple Choice - Theory: Part 4 1. Which type of consumption will pay consumption tax? a. Domestic consumption b. Foreign consumption Both domestic and foreign consumption d._ Neither domestic nor foreign consumption 2, Which isa tax upon the usage of income? a. Savings tax . Consumption tax b. Investment tax d. Business tax 3. Which is subject to the VAT on importation? a. Foreign consumption from resident sellers b. Foreign consumption from foreign sellers & Domestic consumption from resident sellers 4. Domestic consumption from foreign sellers 1. Which is subject to business tax? a. Foreign consumption from resident sellers b. Foreign consumption from foreign sellers © Domestic consumption from resident sellers d. Domestic consumption from foreign sellers 5. Which isan incorrect statement regarding consumption taxes? a. Theyare always indirect inn: lirect in nature, b. They effectively tax everyone in the state. 12 Chapter 1 Introduction to Consumption Taxes ie ‘They apply only when the goods or services are destined (OF consumption within the Philippines. 44. Consumption taxes may encourage savin 6. Which is correct regarding consumption tax Temay help in the redistribution of wealth to soclety. by tisentirely based upon the consumers‘ ability to PaY- €._Itapplies to both domestic and foreign consumption. &._Itapplies only when the seller is non-resident igs formation. 7. Domestic consumption is taxable when the seller is a. anon-resident. b. aresident €._ either resident or a non-resident. 4. both a resident and a non-resident. 8. Foreign consumption shall ‘a. pay consumption taxif the seller isa resident. b. pay consumption tax ifthe seller is a non-resident. not pay consumption tax if the seller is a non-resident. .gardless of the residency of the seller. dd. not pay consumption tax re 9. ‘The taxon domestic consumption is referred to as, a. VATonimportation. c-Either Aor B b. Business tax d.Neither A nor B 10. The tax on domestic consumption from foreign suppliers is a. VATon importation. Either Aor B b. Business tax. ‘.Nelther A nor B 12. The tax on domestic consumption from resident suppliers is a. VATon importation. Either Aor B b. Business tax. 4d. Neither Anor B 12. Which is nota business tax? a. VATonimportation Percentage tax b. VATonsales 4d. Excise tax 13, The percentage tax is generally a. 3% ofsales orreceipts c.3% of mark-up b. 3% of purchases 4.12% of mark-up 14, The VAT asa business taxis a. 12%ofsales or receipts c.12% of mark-up 4.3% of mark-up b, 12% of purchases B ‘Scanned with Camcanner | cagte 1 ntroscion to consumation THES vat on imporaon 15, Theva on imBOrane™ «aye ofmark-uP ao amos, axofmaru 416, Whe form of consumption ist fe2? a salestoa resident By Salesto anon-resident : be Sales orion by a importer engaged in Dos _dmporetion bya importer not engaged in business idence oft, the VAT on Importation 2 form of ‘¢Ad valorem tax Specific tax iptions is tax-free? sgaged in trade or business din trade or business 17. As! a Directtax b, Indirect tax import consum from a seller not en from a seller engage’ 18, Which of these i a Importation b. Importation © BothAandB Neither AnorB tation is subjectto the VAT on importation? person engaged in business 19, Which impor igaged in business ‘a. Importation by a Importation by a person not en & BothAorB Neither AnorB 20, Who isthe statutory taxpayer to the VAT on importation? a. Foreignseller Both Aand B b. Domestic buyer d.None ofthese Multiple Choice - Theory: Part 2 1. Generally, the tax basis of business tax is 2. salesorreceipts Either A or B purchase cost Both AandB 2. Whois the statutory taxpayer of business taxes? 2 Thesoler who must be engaged in trade or business ‘The seller, whether or not engaged in trade or business Thebuyer who mustbe engaged in trade or business .e buyer, whether or not engaged in trade or business 3. The sonomie taxpayer of consumption taxes ae 2 Sellers who are engaged in trade or business Selon whtherarnatengnged in trae or busines & Boyeswhoareengigedin trade or business iether or not engaged in trade or business. 14 ee chapter 1 Introduction to Consumption Taxe Whats the method used to determine the ‘AT due and payable? 2 Direct method ‘crax credit method A Old Withholding method which tatementis conceptually incorrect? Whi buyer pays the consumption tax o” Hs/Pot purchase 01 a ae er pays the consumption tx to the BVT Te The br pays the consumption taxto the EOverT eT Speer otlects consumption ax for dhe povernment 6. Which is correct? Wc cates to foreigners must inlude a business 2. The aesto residents mustinclude a business be The Sechase from abroad must include a business 2% a. Allofthese ne seller Output VAT is called 7. The deduction from a. Percentage tax ¢ Input VAT 2 Vatrdueand payable ¢.VAT on importation 8. Which isa pure form ofa sales tax? Both AandB a. Percentage tax b. Value Added Tax ‘9, Statement 1: A business which pays VAT normally do tax. Ta nent 2:A business which pays percentage taxalso pays VAT Which statement is correct? a. Statement 1 c Both statements ‘Neither statement ‘Neither A nor B es not pay percentage b. Statement 2 10, Which of the following business taxes. applies only for domestic consumption? a VATonsales Excise tax b. Percentage tax 4.All of these 11, Excise taxis pald by a Sellers Bb. Buyers Importers or manufacturers ‘ding on who agreed to pay the excise tax d._ Seller or buyer depen 12. Export sale is (select the incorrect one) a. Exempt from percentage tax Exempt from VAT 15, ‘Scanned with Camcanner Chapter 1- Introduction ‘to Consumption Taxes a 1 me a od somts cst gto & Satemene SiNetther statement su: whichis imposed witha tx of zero pereet (09677 "a. Allexport sales B Miorolsofvar-regiteredaxraers SrvaT-registered taxpayers Importsales et sony & Expor sales of zon-VAT 15, Which isnot subject to excise tax? a. Sinproducts : bNon-essential commodities ¢ Food products 4. Mineral products 16. The tax basis of consumption tax on foreign purchase is a. sales or receipts Either A or B b. purchase costs .Both Aand B 117, The consumption tax on domestic purchases is imposed upon the a sales or receipts Either A or B b, purchase cost d.Both AandB 16, Technically, the excise tax on the manufacture of certain articles is payai only when the article is intended for a. Domesticconsumption c. Both Aand B b. Foreign consumption d. Neither Anor B 19, Which is correct with the VAT on importation? a. Payable only when the importer is engaged in business b. Payable only when the foreign seller is engaged in business Payable regardless of the purpose of the importation Payable only when the resident seller is not engaged in business 20. The VAT on domestic sales is an example of a. adirecttax. caregulatory tax. b. anindirect tax. daspecifictax. 16 chapter 1= Introduction to Consumption Tax05 stipte cholce -Problem Part ae Mute Cry, a restdene business, renders, Sei Fre ayers ho snot engaged i Business typeof consumption 3 Mr. Erwin, a Identify the statutory taxpayer and the a. Free Company ~ Business tax b. Mr- Erlwin - VAT on importation e. Mr.Erlvin~ Business tax Gi. Free Company - VAT on importation ‘om Baliwag Company, a non-resident business, purchased 200,000 from Cauayan Company, a resident business. Which will pay the consumP! on this transaction? a. Cauayan Company b. Ballwag Company 3, Heldenberg Corporation, a resident business, pu! from Kiwi Company, a non-resident business. Identify the statutory taxpayer and the type of consumption tax. a. Heldenberg Company ~ Business tax b. Kiwi Company ~ business tax Heldenberg Company ~ VAT on importation Kiwi Company ~ VAT on importation 2. Both Aand B ‘Neither A nor B irchased P 100,000 goods : 4. Mr. Cedric, an employee, sold his residential I lot to Mrs. Corneto, a real property dealer. Who is subject to consumption tax with respe ct to this transaction? cAand B a. Neither A nor B 5. Mr, Porma made a casual sale involving a car to Mrs. Tutyal, a resident buyer. Mr, Porma is nota car dealer. Who is subject to consumption tax? a. Mr.Porma Both Mr. Porma and Mrs. Tutyal >. Mrs, Tutyal 4. Neither Mr. Porma nor Mrs. Tutyal 6, Mr. Llama, an employee, imported a pair of shoes from Hongkong. Which ‘consumption taxis he liable to pay? a. Business tax Both b. VATonimportation d.None 7. Kapederasyon, a charitable non-profit corporation, imports various office supplies from XG Manufacturing Industries in China. Which is correct? a. Kapederasyon is exempt from VAT on importation, b. Kapederasyon is subject to VAT on importation. XG Manufacturing Industries is subject to business tax. 4. XG Manufacturing Industries shall pay the VAT on the importation. 7 ‘Scanned with CamScanner Chapter 1 Introduction to Consumption Taxes 8 Me cavte produces an excisable atl forsale Inthe Pit Which einvomect with respect to Afr. Cavite’ business taxation? © Ba cane saet tee VAT oF erentage tax Ae Cae gents enn adton to VAT oF percentage Ne Gove pn rin aon to VAT and perce ‘Mr Caite wil pay excise tax without regard to Whether Reig y, non-VAT taxpayer. at ©. A person engaged in business is subject to 3% business tax y, | A eer. ofasods in his possession costing P77,600 which he gy by iE afte Sk bone involethesale ofthe P7700 goods at eat 2 P100.000 @P97.000 & prosooo dip 110,000 410, A business wants to make a F10,000 prot from the sale ofan in aeeso000, The business ls subject to 3% percentage ‘amount shall the business invoice the sale? kg a paia37 40,000 ' & pat200 P3880 | 11. Aperson who imports goods or properties wll more likely pay P5755 pereentge ton the importation } B. SIZ VATonthe importation i © either 3960" 1236 taxon the Importation @ noconsumpton tax ! 12 Aperson who snot regularly engaged in rade or business made a cag] ‘AWrota property for P100,000, What will be the nvlee priced sae’) a P100,000 ¢ P112,000 1 & Pio3000 Either Borc 413. Alison is regularly engaged in the sales of goods. He will pay ‘a Valueadded taxonly. Either Aor B b. Percentagetaxonly. Neither A nor B 14, Mr. Ventura is subject to 3% percentage tax. He made a total collection 206,000 during a month and paid P103,000 in purchases. Compute bs Bree percentage tax a Po © P6,180 b. P3000 4.P12,000 | 15. A business taxpayer purchased goods worth P120,000 from non-resides and sold goods worth P140,000 for P180,000. What is the concept of ‘vt added” for VAT purposes? a 200,000

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