IMPORTATION 4.

Enumerate the importations that are exempt

Refers to the purchase of goods or services by in VAT
Philippine resident from non-resident sellers. a) Exempt Goods importation
b) VAT-exempt persons importation
1. What are the types of consumption tax on c) Quasi-importation
importation? d) Exempt under Special law
Answer: importation
 VAT on importation - for the importation
of goods from non-residents 5. What are the goods imported that are
 Final Withholding VAT - for the purchase of exempt from VAT on importation?
service from non-residents Answer:
Goods that are considered as basic necessities.
2. Compare VAT of importation with Final Such as:
Withholding VAT. I. Basic Human food and related goods
VAT in Final a) Agricultural or marine foods products
importation Withholding in original state
VAT b) Livestock and poultry, yielding or
Object Goods services producing foods for human
consumption consumption
c) Breeding stock and genetic materials
II. Books, news papers and magazine
Imposed Importers/buyers Foreign
III. Passengers or cargo vessels and air crafts,
upon services
including engine, equipment and spare
providers
parts
Statutory Importers/buyers Resident
tax payers purchaser of
Note:
service*
 Import exemption is limited to agriculture
nature Direct tax Indirect tax
or marine food products in their original
Tax basis Landed cost Contract
state or those which undergone simple
price
processing.
Collecting BOC BIR  Vatable - Goods that undergone advance
agency processing.
Timing Before After the
payment withdrawal of month
goods payment 6. What are the examples of agricultural or
*Individuals engaged in business and marine food in original state?
corporations a) Fruits
Note: “VAT on importation is payable to BOC b) Vegetables, tea, ginseng
and is paid prior to the withdrawal of the goods c) Farm products
from the customs warehouse. The Final d) Marine foods such as fish crustaceans
Withholding VAT is 12% of the contract price for e) Poultry and livestock
services rendered by non-resident. It is remitted f) Milk, egg, mean for human
to the BIR. consumption
Note:
3. What are the classification of importation  Livestock includes cow, bulls, calves, pigs,
goods? sheep, goats and rabbits. Poultry shall
Answer: include fowl, ducks, geese and turkey.
a) Exempt importation Marine food shall include fish and
b) Vatable importation crustaceans such as, but not limited to,
eels, trout, lobster, shrimps, prawns,
oysters, mussels and clams (RR16-2005).
 To be considered in “original state”, the
goods must be in their raw for,. However,
those that underwent simple processing
are also exempt.
7. What do you mean by simple processing? 13. Other items that are Vatable items, hence
a) Acts of preparation for the market not exempt in VAT on importation
b) Acts of preservation a) Flowers
c) Acts of packing, including advance b) Cockfighting chickens
technological packing c) Pesticides
d) Herbicides
8. What are Example of simple acts of e) Animal medicine
preparation? f) Fishing equipment
a) Boiling g) Fishing boats
b) Broiling h) Tractors
c) Husking i) Plows
d) Roasting j) Driers
e) Stripping k) Threshers
f) Grinding l) Harvesters
m) Zoo animal
9. What are the examples of simple acts of n) Race horse
preservation? o) Aquarium fish
a) Freezing p) Pets
b) Drying q) Specialty feeds
c) Smoking r) Importation of Ingredients for
d) Salting processing human food
s) Logs
10. What is processed agricultural or marine t) Woods
foods? u) Bamboo
Answer: v) Orchids
Foods that pertains to those which have w) Non-food crops (such as Rubber hem,
undergone changes in their chemical Abaca, Topical herbs, Cotton, tobacco)
composition or have undergone complex x) Marine products used for ornaments
processing or are utilizing advances (such as Shells and Corals)
technologies in their processing. y) Imported donations if made in favor
of accredited non-profit organization
11. Examples of processed agricultural or
marine foods? “Note: The following is Subject to VAT
a) Refined sugar unless they are imported for the use of
b) Wine or vinegar cooperatives, directly and exclusively for
c) Vegetable or coconut oil production.”
d) Canned sardines
e) Butter 14. What is the rules on VAT of poultry and
f) Soy feeds?
g) Flour livestock Poultry Pets
h) Marinated milk fish Importation of x x o
Importation of x x o
12. Other items that are exempt from VAT on feeds for
imporation: Importation of x x o
a) Chicken that produces for meat or feed ingredients
eggs for
b) Seed or seedlings
c) Breeding stocks 15. What is the basis of exemption of
d) Genetic materials importation of books, newspapers, magazine,
e) Fertilizers review or bulletins?
f) Feeds Answer: The basis is the necessity of education
g) Importation of Ingredients of feeds and information.
for animal foods
16. What are the conditions for exemption of
newspaper, magazine, review or bulletin?
Answer:
 Appear at regular intervals with fixed
prices for subscription
 Sale must not be devoted principally to the
publication of paid advertisements.
“note: Exemption does not extend to other
school supplies, such as chalk, notebooks etc.”
17. What does the coverage of exemption of
passenger or cargo vessels and aircraft
importation? And the reason thereof?
Answer: The coverage of exemption of
importation of passenger or cargo vessels and
aircraft includes engine equipment and spare
parts. The reason for exemption is to help the
modernization of the shipping, transportation
and tourism industry.
18. What will be the qualification under
MARINA for the exemption of passenger or
cargo vessels and aircraft?
 Passenger/cargo vessels - 15 years
 Tankers - 10 years
 High speed passenger crafts - 5 years
“Note: importation of buses for land
transportation is subject to VAT”
19. Explain the Importation by VAT-exempt
person.
Answer: They are not subject to VAT on
importation. The extent of their exemption
varies per exempt persons. When the exempt
importer subsequently sells his exempt
importation to non-exempt person, thus non-
exempt buyer is subject on VAT in importation.
20. Who are the VAT-exempt persons?
a) International shipping operators or
air transport operators - limited to the
importation of fuel, goods and
supplies because they are not
consumed here, they are consumed in
international transport.
b) Agricultural operatives - limited to
importation of direct farm inputs,
machinery and equipment, including
their spare parts.
c) Ecozone-locators - Ecozone are
designed places of economic activity
for the production of goods or
services for the export market. -
OUTSIDE CONSUMPTION, therefore
economic zone locators is Exempt on
VAT on importation and customs
duties.
21. What are the conditions for exemption of
Agricultural operatives?
 Cooperative must be agricultural
cooperative duly register and in good
standing with Cooperative Development
Authority (CDA)
 The importation involves direct farm
inputs, machinery, equipment and their
spare parts to be used directly and
exclusively in production.
22. What is the definition of Quasi-importation?
a) Importation of personal and household
effects belonging to residents of the
Philippines returning from abroad on
NRC coming to resettle in the
Philippines.
b) Professional instrument and
implements, wearing apparel,
domestic animals and personal
household effects belonging to
persons coming to settle into the
Philippines, for their own use and not
for sale, barter or exchange.
23. What are the condition why the Quasi-
importation is exempted to VAT
 The goods belong to persons who come to
settle in the Philippines
 Goods must accompany the person upon
arrival or within 90 days before or after
his/her arrival
 Evidence to show that the change of
resident in bona fide(real)
 Importation is not a vehicle, machinery or
other equipment used in manufacture or
merchandise of any kind in commercial
quantity.
“Note: The VAT on importation applies to
importation which represent current
consumption of personal, household or
professional effects. It does not apply to their
past consumption.”
24. What is the basis of VAT on importation?
Answer: It is based on 12% of the total
landed cost on importation.
25. What are the composition of landed cost?
A. Dutiable value - also called as
transaction value
a) Cost of goods
b) Freight
c) Insurance
d) Other charges for bringing the
asset
B. Other in-land cost - cost of
importation incurred prior to withdrawal
of the goods from warehouse
a) Customs duties
b) Excise tax
c) Other in-land cost
i. Bank Charge
ii. Brokerage fee
iii. Arrastre charge
iv. Wharfage due
v. Documentary stamp tax
vi. Import processing fees
26. How does the customs duty computed?
Answer:
Dutiable value x Exchange rate x Rare Duty
27. Explain the nature of Final Withholding
VAT
Answer: domestic consumption by
anybody of services from abroad should
be subject to VAT. It is imposed on non-
resident services providers- which law
conclusively presumed that they engaged
in business even their transaction are
merely casual. The non-residents is not
obliged to file tax returns due to territorial
consideration, therefore the resident
buyer to withhold the “VAT” to remit to
the government.
28. The obligation to withhold the VAT exists
only if?
a) Service is rendered in the Philippines
b) Payor-purchaser o f the service is an
individual engaged in business or
profession.
“Note: no obligation to withhold the VAT if the
payor is not business, except for corporate
purchasers of service.”
29. The following are VAT - exempt import of
services:
a) Purchase of services from non-
residents when the service is
rendered abroad
b) Purchase of services from non-
residents when the individual
purchaser is not engaged in business
c) Purchase of services from non-
residents by VAT-exempt persons
such as ecozone locators.
30. What import service is specifically subject
to percentage tax?
Answer: The only import service that is
currently subject to a percentage tax is the
direct acquisition of insurance cover from
abroad. Premium payment on insurance is
subject to 5% Percentage tax.
31. What form used in payment of withholding
VAT and when is the payment?
Answer: using BIR form 1600, remitted
monthly on or before the 10th day of the
following month after the withholding
sales.
32. Explain the treatment of VAT on
importation and the Withholding VAT
Answer:
A. If the resident purchaser is a VAT-
registered business, it can claim the VAT on
importation or withholding VAT was as
input VAT creditable against its output VAT.

B. If the resident purchaser is non-VAT

business, the VAT on importation or final
withholding VAT shall be part of the cost of
purchase of goods or services and shall be
treated as asset or expense.

C. If the purchaser is not engaged in

business, the VAT on importation is merely
added to the costs of the goods imported.