Chapter 9 - Input VAT CHAPTER 9 INPUT VAT Chapter Overview and Objectives After this chapter, readers are expected to comprehend 1, The determination of input VAT be 2. The concept of creditable input VAT and its requisites 3. The types of input VAT and their timing of credit 4, The allocation of non-traceable input VAT 5, The computation and presentation of total allowable input VAT INPUT TAX Input tax or input VAT refers to the VAT due or paid by a VAT-registered person on importation or local purchases of goods, properties, or services, including lease or use of properties in the course of his trade or business. Determination of Input VAT The VAT on purchase is usually reflected as a separate item in the VAT invoice or VAT official receipt issued by the VAT-registered supplier. Illustration Assume for instance the following VAT invoice issued by a supplier: Selling price P 500,000 Output VAT (12% x P500,000) Invoice price The input VAT of the buyer is the i “Output VAT" r sales invoice or VAT official receipt issued by the seller or suvy on the VAR sales ine 1 supplier, What if the VAT is not se; If the VAT is not billed sey shall be deemed to be incl parately indicated? parately, the selling price stated in the sales docume™ lusive of VAT (RR1 6-2005). Mlustration Assuming that the supplier simply indicated the P560, 000 invoice price wii Parately indicating the VAT thereon, the VAT shell be computed as: Invoice price x 12/112 Hence, P560,000 x 12/112 = P.60,000, 290Chapter 9- Input VAT The same procedure is employed when the VAT is erroneously billed by the seller. (CREDITABLE INPUT VAT Not all input VAT paid on purchases is credi 7 output VAT. reditable or deductible against Requisites of a creditable input VAT: 1, The input VAT must have been paid or incurred in the course of trade or business. 2. The input VAT is evidenced by a VAT invoice or official receipt. 3. The VAT invoice or receipt must be issued by a VAT-registered person. 4, Input VAT is incurred in relation to vatable sales not from exempt sales. Illustration 1 Mrs. Aguilar had a P230,000 output VAT in the month. She also made the following purchases during the month: Goods from non-VAT suppliers P 280,000 Goods from VAT suppliers with VAT invoices 224,000 Importation of car for personal use, VAT inclusive 41,120,000 Importation of grapes and apples for sale 300,000 Importation of merchandise for sale, VAT inclusive 896,000 Services from VAT suppliers, evidenced by ordinary receipts 120,000 The creditable input VAT shall be: Goods from VAT suppliers (P224,000 x 12/112) P. , 24,000 VAT on importation (P896,000 x 12/112) rece 38.000 Total creditable input VAT =a a purchases from non-VAT suppliers and_ purchases of VAT-exempt goods or properties have no input VAT. 2. The input VAT on purchases not intend creditable against the output VAT. boy 3. Input VAT evidenced by an ordinary receipt receipt is not creditable. led for business (ie., for personal use) is non- ther than by a VAT invoice or VAT official The VAT due of Mrs. Aguilar shall be determined as: Output VAT 20.000 Less: Input VAT P__110.000 VAT due P 230,000 Mu: 5 _ ; Malaybalay Corporation had the following input VAT during the quarter: 291Chapter 9 - Input VAT Input VAT traceable to regular domestic sales P 400.000 Input VAT traceable to VAT-exempt sales 2anae Input VAT traceable to export sales ' ‘The creditable input VAT shall be: Input VAT traceable to regular domestic sales P s00,000 Input VAT traceable to export sales 600,000 Total creditable input VAT P.1,000,000 TYPES OF INPUT VAT Transitional Input VAT Regular Input VAT Amortization of Deferred Input VAT Presumptive Input VAT Standard Input VAT . Input VAT Carry-over AuAaAWNE RANSITIONAL INPUT VA‘ A person who becomes liable to value-added tax or any person who elects » be a VAT-registered person shall be given an initial input tax credit equivalent to 2% of the beginning inventory of goods, materials, or supplies or the actual VAT paid th ereon whichever is higher (See Sec, 111 NIRC& amended by RA 9337), The value allowed for income tax purposes on inventory shall be the basis: of she computation of the 2% transitional input VAT. (Sec.111.1(a), BRIE 2005). Goods exempt from VAT shalll be excluded in the computation of the transitional input VAT (RMC 62-2005), In short, the transitional in inventories in the month of reg Mlustration 1 Mr. Horace opted to be registered as followin inventory: Bi a VAT taxpayer. He had the VAT-exempt goods ,000 Vatable goods (all purchased from non-VAT tao Equipment (purchased f rom AVA AT suppliers) 40,000 aVAT suppli Total beginning inventor Pplier) 112,000 put VAT is based on vatable beginniné istration as a VAT taxpayer. ry 232,000 2% of beginning inventory (2% x P40,000) Actual VAT in beginning inventory y eo Transitional input VAT (HIGHER) P__800 292Chapter 9— Input VAT Note: 1 Ue eee ey a ——1.200 (500/1,000 x P2,400) P1180 300Chapter 9 - Input VAT Mr. Bcan claim only P1,200 In iput VAT 12/112. Note that this is not a on the goods deemed sold, not P12,000 x in erroneous billing, PRESUMPTIVE INPUT VAT Persons or firms engaged in the processing of sardines, mackerel and milk and in the manufacturing of refined sugar, cooking oil and packed noodle based instant meals, shall be allowed a presumptive input tax equivalent to4% of the gross value in money of their purchases of primary agricultural products which are used in their productions. The term “processing” shall mean pasteurization, canning, and activities which through physical or chemical process alter the exterior texture or form or inner substance of a product in such manner as to prepare it for special use to which it could not have been put in its original form or condition. Code word on qualified processors: Sa MaMi Co PaRe (Sardines, Mackerel, Milk, Cooking Oil, Packed Noodles and Refined Sugar) The presumptive input VAT is a tax incentive to these processors of VAT- exempt raw materials into processed food products. The apparent reason behind the tax incentive is the absence of adequate claimable input VAT for these entities, Without the incentive, their output VAT is effectively their VAT payable. Mlustration 1: Processor ofcookingoil = Bilimo Oil Corporation, a VAT-registered cooking oil manufacturer, purchased the following materials and supplies in the processing of cooking oils during the month: ——Cost___ Input VAT copra P 1,200,000 rf Hexane solvent goon) | 2¢000 Cans and bottle containers ee 3,600 Sodium hydroxide/carbonate b Fy Activated carbon ——100,000 P eeod Total B.1.630,000 roduced 1,000 cans and 1,500 bottles of cooking oils During the month, Bilimo Prt tiesto various wholesalers for P2,800,000. and sold 800 cans and 1,200 bott The presumptive input VAT shall be P1,200,000 x 46; hence, PA8,000, Assuming that there are no other sources of input VAT, the VAT payable for the Month shall be computed as: 301Chapter 9- Input VAT Output VAT (P2,800,000 x 12%) P 336,000 Less: Input VAT P 51,600 Regular input VAT Presumptive input VAT 48,000 99,600 VAT payable P_236,400 1 there isno actual input VAT on copra, a coconut product, but the law imputes or. presumptive input VAT on it as an incentive. 2. Theactivated carbon is an industrial processed product, not an agricultural input. alongs Mlustration 2: Processor of sardines ; Sardinas Corporation processes hot chili-flavored sardines. During the mon, Sardinas purchased the following ingredients for the processing of cannej sardines. —Cost___Input VAT Fresh sardines P 800,000 - Hot chili 50,000 - Tomatoes 400,000 - Ordinary salt 20,000 - Tin can 120,000 P 14,400 Labels 60,000 7,200 The presumptive input VAT shall be computed from the agricultural purchases as follows: Hot chili P 50,000 Tomatoes 400,000 Ordinary salt 20,000 Total agricultural purchases. P 470,000 Multiply by: 4% Presumptive input VAT P__18,800 Note: 1. Sardines, including mackerel, are 2 It roduct in original state (RR16-2005). 3. The regul: . Rein The regu pad vaio the tin cans and labels are claimable in the month o! 3 purchee month of purchase, no” Presumptive input VAT which shall likewise be claimed! nti? Illustration 3: Processor of refined Sugar for others Sugarie Corporation 0p crates a sugar refinery for clients, During the M0" prea ee worth of sugarcane and produced P40,000,000 W" ar. Sugarie charges 10% of the production as, processing charge. hit tno! 302Chapter 9- Input VAT STANDARD INPUT VAT The sale of goods and services to the government or any of its political subdivisions, instrumentalities or agencies, including government-owned and controlled corporations (GOCCs) is subj i i VAT based on the gross payment, ) is subject to a 5% final withholding The government, instrumentalities, agencies or GOCCs shall withhold the final VAT before making the payment and remit the same within 10 days following the end of the month the withholding was made. The 5% withheld final VAT shall be deemed the actual VAT payable of the seller. Due to the final withholding VAT, the sellers to the government, instrumentalities or agencies including GOCCs can effectively claim only 7% of sales as input VAT. This is called the “standard input VAT.” The actual input VAT on the sale to government would have to be increased or decreased to conform to the amount of the standard input VAT. The adjustment is closed to expenses or loss or income or gain. Mlustration 1 AVAT taxpayer made a P100,000 sales to the government invoiced at P112,000 inclusive of output VAT. The taxpayer purchased the same for P90,000 exclusive of P10,800 input VAT. The government will withhold P5,000 (Le. 5% of P100,000) and release the 107/000 net proceeds of the sale to the taxpayer. The P5,000 withheld is presumed the actual VAT payable of the seller. Hence, P 12,000 Output VAT 7,000 Less: Standard Input VAT (7%) z 5.000 VAT Payable (5% withheld final VAT) The difference between the actual input VAT and standard input VAT is disposed as follows: , Pp 10,800 het T (2 nt to be claimed) ual Input VAT (amon ountallowable) 2.000 Less: Standard input VAT ( p 3,800 Loss or addition to expenses my Journal Entry Method zed by accounting entries as follows: This can be conveniently analy’ 303Chapter 9 - Input VAT P 90,000 Purchase 410.800 sooo Inpet 100,801 Acer fecountspayable/cash fe To record the purchase 7,000 Cash/Receivable mon Pi F aon Final Var wield (5%x Benoa ne 2,000 Output VAT 1 To record the sale to the government. Output VAT P 12,000 Income & Expense summary (loss) 3,800 . Final VAT withheld P 5,00 Actual Input VAT 10,800 To close the VAT accounts Mlustration 2 A VAT taxpayer purchased Soods for P10,000 plus P1,200 input VAT. It sold the Boods for P100,000 to a government agency. The sale was invoiced at P112,000 inclusive of P12,000 output VAT. The difference between the actual input VAT and standard input VAT is disposed as follows: Actual Input VAT Less: Standard in, Gain or deductior (amount to be claimed) P 1,200 put VAT (amount allowable) 7,000 mn to expenses Journal Entry Method This can also be conveniently analyzed by accounting entries as follows: Purchase P 10,000 Actual input VAT 1200 Accounts payable/cash ' To record the purchase ve ttz00 Cash/Receivable ce P1 Final VAT withheld (59% x P1ooK) ra 00 Sales “ Output var ered To record the sale to the government A000 Outpuevar — p 12,000 Final VAT withhelg Actual Input VAT , Fea Income & Expense sumn st To close the VAT accounts? 94M) cea 304Chapter 9 - Input VAT what if the seller is a non-VAT registered seller? The government or GOCC it sale before payment. shall withhold a 3% final percentage tax on the Future transition The Final withholding system on the sales to the government and GOCC will be al andonet effective January 1, 2021 in favor of the tax creditable withholding system. This would mean the elimination of the 7% standard ing VAT in favor of full creditability of input VAT on government or GOCC sales. INPUT VAT CARRY-OVER The input VAT carry-over is the excess of the input VAT over the output VAT ina particular month or quarter. It is the VAT overpayment that appears after tax credits and payments are deducted against the net VAT payable. Rules on Input VAT carry-over 1. The input VAT carry-over of the prior quarter is deductible in the first month of the current quarter. 2. The input VAT carry-over in the first month of the quarter is deductible in the second month of the quarter. 3. The input VAT carry-over in the second month of a quarter is not deductible to the third month of the quarter. 4. The input VAT carry-over of the prior quarter is deductible in the third month quarterly balance of the present quarter. Illustration 1 ‘The following data relates to the regular sales of a VAT taxpayer: Qutput VAT — Input VAT Prior quarter B.350,000 — P_390,000 Current quarter: 1* month of current quarter 2>4 month of current quarter 34 month of current quarter P 120,000 P 100,000 150,000 145,000 220,000 + __70,000 P.490,000 P_315,000 ‘The credit rules of the input VAT carry-over shall be applied as follows: warter- a th ‘month 2n¢month — 3"! month 720,000 P 150,000 —P 490,000 Output VAT p 350,000 =P 120, fe aie Less: Input VAT 390,000. og eterens Sn Carry-over (e40,000) > it) —>_-20000 140.000 Input VAT carry over) Ut over (215,000 Not an input VAT payable P_135,000 305Chapter 9 - Input VAT | . | The taxpayer will not pay VAT in the Prior quarter, frst month ang sq. | nth of the current quarter since there is a negative VAT payay, emayer shall pay P135,000 VAT in the third month of the current qua | ter. eae 40,000 input VAT carry-over in the prior quarter is creditable inthe fst a arter. 2, The P20.000 input VAT carry-over inthe first month ofthe current quarters cred, in the second month of the current quarter. k 3. The P15,000 exces input VAT in the second month cannot be carried over to th month quarterly balance stead, the P40,000 deferred input VAT carryaner at preceding quarter is credited in the current quarterly balance. Illustration 2 The following data relates to the regular sales of a VAT taxpayer: Prior quarter 2.360,000 0 Current quarter: 1% month of current quarter P 160,000 P 100,000 2"4 month of current quarter 150,000 160,000 34 month of current quarter 170,000 65,000 P.480,000 P_325,000 The credit rules of the input VAT carry-over shall be applied as follows: QutputVAT — Input VAT P.400,000 ior quarter Pre 2 3month = Jmonth 2d month 34month Output VAT P 360,000 P 160,000 =P 150,000 —P480,000 Less: Input VAT 400,000 100,000 160,000 325,000 Carry-over —> _40,000 ---- --> 40,000 VAT Payable 1,00 : 20,000 10 Notan input VAT carry-over (B10,000) ____— VAT payable p_95,002 ‘The P40,000 is 2 ma F 40.00 input va carry-over in the prior quarter is deductible in the first mort! 2. The taxpayer shall pay the P20,000 VAT a Payable in the first month. The P10,000 & ‘cond month cannotbe carried th. 3. TheP40,000 " a over to the third month. tho thecunee vn ec carry-over in the prior quarter is deductible in the third mo" : 4 The VAT paid in the first two months of th rly ba iy bate Hence, the zat oe 'e quarter is deductible in the quarte! yall Hence the P2 ‘AT paid inthe frst month is deducted ih the quarterly VATP WHAT ARE EXCLUDED FROM INPUT VAT CARRY. ‘01 : ~OVER? 1. Advanced VAT which have been applied for a tax cr dit certificate ior 2. Input VAT attributabl 1 im whieh ha ied P ‘Putable to zero-rated claim which have been apP! a tax refund or tax credit certificate 306Chapter 9 - Input VAT 3, Input VAT attributable to zero-rated i - year prescriptive period sales that expired after the two- The rules of advanced VAT will be discussed in the succeeding chapter. RULES ON CLAIM FOR CREDIT OF INPUT VAT. 1, Specific identification - input VAT that can be traced to a particular sales transaction is credited against the output VAT of such sales 2. Pro-rata allocation - the amount of input tax due or paid that cannot be directly and entirely attributed to any one of the sales transactions shall be allocated proportionately on the basis of sales Mlustration 1 - Specific Identification A VAT taxpayer had the following sales with their corresponding directly traceable input VAT during the month: Salesamount _InputVAT_ Sales to private entities P 900,000 P 60,000 Export sales 300,000 36,000 Sales to government 250,000 24,000 Sales of exempt goods 100,000 ____2,000 Total P_1550,000 P__122,000 The Creditable Input VAT may be computed directly as: Input VAT on private sales P Set Input VAT on export sales og Input VAT on government sales (79 x 250,000) 125 Total allowable (creditable) Input VAT P_113,500 Input VAT deductible against gross income through costs and expenses: P 2,000 Input VAT on exempt goods (p24,000 - P17,500) __6.500 P___8,500 Excess input VAT (government) Total input VAT - . eae * ued -eracen snag had the following transactions during the payer engage’ month: Pp 200,000 Exempt sales 300,000 Export sales 100,000 Sales to government __ 400,000 Regular sales 21,000,000 ‘otal 307Chapter 9 - Input VAT During the month, the taxpayer had P124,000 total input VAT that carne, uring ) y traced to a particular transaction. The non-traceable input VAT shall be allocated as follows: Sales Allocation Allocate | Amount __Factor__ var | Exempt sales P 200,000 P200K/PIM xP124,000=P 249m, Export sales 300,000 P300K/PIM xP124,000= 372m Sales to government 100,000 P100K/P1M x P124,000 = 12,400 Regular sales 400,000 P400K/P1M x P124,000 = Total sales P.1,000,000 B_124.009 The creditable input VAT shall be: Input VAT allocable to export sale P 37,200 Standard input VAT (P100,000 x 7%) 7,000 Input VAT allocable to regular sales 49.600 Total PB 93,800 Mlustration 3 -With Non-Traceable Input VAT A taxpayer had the following sales during the month: Sales Traceable Amount _ _Input VAT_ Exempt sales P 200,000 P 12,000 Regular sales 300,000 ___18,000 Total P_500,000 P__30,000 | There isa P24,000 input tax that cannot be traced to either type of transaction The creditable input VAT shall be: Input VAT directh y traceable to vatable sal Allocated input VAT to vatable sales Pn BeOS (P300,000/P500,000 x P24,000 Total allowable (creditable) input AT Donat 308chapter 9- Input VAT MPUTATION OF THE ALLOWAB; : OHE VAT RETURN LE OR CREDITABLE INPUT VAT IN In practice, the allowable (creditable i i inthe VAT return as follows: ) input VAT is computed and presented Input tax carry-over, from previous period ee Deferred input tax on capital goods exceeding PIM oo Transitional input tax 2 a HO KKK, Presumptive input tax = Regular input VAT from: Purchases of capital goods not exceeding P1M XXX,AXX Purchase of capital goods exceeding P1M XXX KKK Domestic purchases of goods, other than capital goods HK KKK, Importation of goods, other than capital goods XXX)XXX Domestic purchases of services XXX XX Services rendered by non-residents XXX XXX Others XXX XXK Total available input tax P xxx.xxx Less: Deductions from input tax Input tax on capital goods, deferred for future periods P xxx 700 Input tax on sales to gov't closed to expense XXX|XXX Input tax allocable to exempt sales XXX|XXX, Input VAT claimed as refunds/TCC XK XXX Others —XXK.XXX Total allowable (creditable) input tax P_ooocxxx Mustration | . AVAT taxpayer had the following data during the month Sales to regular customers P Sahai — to the government 3,000,000 xport sales = Tana Exempt sales wu Total sales oe P 80,000 Input VAT carry-over, from prior Aeriog 121/36 months) 75,000 Deferred input tax (already amortize rR Purchase of goods or services 'mportation of equipment (8-Ye Purchase of non-depreciable 20045 P 7,000,000 P 840,000 00,000 144,000 80,000 9,600 war life) 309Chapter 9- Input VAT P 196,89 ‘aceable to exempt sales ne fa Po eapoiied for VAT refunds/TCC on export sales fi stom input VAT traceable to sales to the governmen! 1000 nly be trace ir ti ‘Amortization of deferred input VAT on capital goods P 740 Input VAT on supplies 28 Total non-traceable input VAT B35 ‘The creditable input VAT shall be computed in the VAT return as: Input VAT Input VAT carry-over, from prior period P Bo, Deferred input VAT i Siti Input VAT on purchase of goods or services X Input VAT on importation of equipment ——144,000 Total available input tax P 1,139,000 Less: Deductions from input tax Deferred input VAT for succeeding period! P 211,600 Input VAT on exempt sales? 203,900 Input VAT on export sales applied for refund or tax credit 150,000 Excess input VAT on sales to government? ____ 23.350 ___588,850 Total allowable (creditable) input VAT P__550,150 Notes to allowable input VAT computation: 1. Amortization schedule on input tax on capital goods with monthly ageres® acquisition costs exceeding P1M: Beginning Allowable Ending ce this month. an From previous period P 75,000 P 5,000 T0008 This period (60 months max.) Total ——144.000 _ 2.400 Nee B219.000 P7400 p__2u.s0o 1. The deferred input VAT from the prior period shall be amortized over the rem (Le, 36-21) unamortized months. Hence, P75,000 + 15 = P5,000. 2. The P144,000 input VAT on the imported equipment must be amortiz ea ov months. Hence, P144,000 + 60 = P2,400, 2. Input tax on exempt sales Aas eeu ax tecly attributable to exempt sales p 196800 Add: Ratable portion of iny of input tax not dire, i (P2,000,000/10,000,0008 p, ce soo attributable ‘Total input tax attrily ‘sal 3.0 attributable to exempt 7 ‘ales pe 310Chapter 9- Input VAT 3, Excess input VAT on sales to the government Input tax directly attributable to government sales P 90,000 Add: Ratable portion of input tax not directly attributable (P1,000,000/10,000,000 x P 35,500) 3550 Total input tax attributable to sales to the government P 93,350 Less: Standard input VAT (P1M government sales x 7%) —— 720,000 Input tax on sales to government closed to expense P_23,350 Note: This excess amount can be negative or positive. The amount is simply included in the computation whether positive or negative. Composition of Creditable Input VAT 1, Input VAT traceable to regular sales 2, Input VAT traceable to export sales that are not applied for tax refund or tax credit 3. 7% of sales to government agencies or GOCCs 311Chapter 9 — Input VAT CHAPTER 9: SEL] ‘EST EXERCISES ussion Questions What is input tax? What are the requisites of a creditable input VAT? Discuss Enumerate the types of Input VAT. How is the transitional input VAT computed? Explain, Discuss the rules on timing of credit of regular input VAT, Explain the concept of monthly aggregate acquisition cost, Explain how to claim input VAT on a construction in progress, What is the amount of presumptive input VAT? . Enumerate the entities entitled toa presumptive input VAT. 10. Who are subject to the standard input VAT? 11. Explain the concept of Input VAT carry-over. €ach of them, PON ANPwWNE True or False 1 1. Only VAT-registered taxpayers can claim input VAT. 2 There is no input VAT from purchases made from non-VAT-registerel suppliers. 3. The total consideration paid by purchasers to VAT taxpayers includes he selling price and the VAT. Registrable persons can claim input VAT. 5. Those who cannot claim input VAT can deduct those input VAT as part of their costs or expenses, & Input VAT can be claimed as a tax credit or a deduction at the option oftte taxpayer. 7. The term creditable input VAT means input VAT deductible from outpit VAT. 8. Exempt persons who issue VAT invoices can claim input VAT. 9. Input VAT is computed as 12/112 of the selling price of the seller. 10. Input VAT may come from importati 11. The purchase of exempt good: : 12. If the VAT is not separately billed, it shall be computed as 12/112 of selling price in the sales document, inst 13. Input taxes on purchases for personal consumption are creditable #8" output VAT. , s 14. Only input VAT for purchase of goods or services in the course of busi is creditable. a be 15. Input VAT needs to be evidenced by a VAT invoice or official receiPt creditable. is and services has no input VAT. True or False 2 1. The transitional input VAT is 2% of the vatable beginning inventory. fro 2. The input VAT on importation is creditable upon release of the £0 the Customs custody. 312Chapter 9- Input VAT 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 2 M = . The Input VAT carry-over in the secon The input VAT on domesti ; The hed he a ieee of goods is deductible upon payment. ices are Fenierat aE ae claimable in the month the ns transitioni " Persot nsitioning to the VAT system shall submit an inventory of goods. The input VAT on the purchase of real i eae installment. ‘eal properties may be paid in The input VAT on depreciable capital . amortized over a period of 60 marin ood ‘or properties must be The input VAT on depreciable capital goods or properties with aggregate ee costs exceeding P1M must be amortized over a period of 60 The input VAT on non-depreciable vehicles is disallowed as tax credit. The presumptive input VAT is 4% of the agricultural and marine purchases. ‘Traders of sardines, mackerel, milk, and cooking oil can claim presumptive input VAT. The standard input VAT is 5% of sales to the government. The standard input VAT is 7% of the purchases sold to the government. ‘There is a deductible expense when the actual input VAT exceeds the standard input VAT on government sales. There is a reduction in costs or expenses or an item of gross income when the standard input VAT exceeds the actual input VAT on government sales. The excess of the input VAT over the output VAT is referred to as input VAT carry-over. Input VAT carry-over is included as part of the creditable input VAT of the following month. The input VAT carry-over ina quarter is deductible in the following quarter. The input VAT carry-over cannot be credited over a period of 3 years. The Input VAT carry-over in a prior quarter can be carried over as input VAT in the first month of the following quarter. \d month of a quarter is creditable on the third month of that quarter. tiple Choice - Theory: Part1 Which is creditable? a. Input VAT incurred on pers b. Input VAT evidenced by an or ¢. Input VAT on exempt sales a. Input VAT traceable to vatable sales ‘onal purchases cdinary receipt itable input VAT? ich i ource ofacreditable inputVAT? Which a ely sous porsons not engeged in uses b, Puret se “of goods from non-VAT registered persons engaged in . h 3 business ©. Purchase of goods from d. None of these aliens who are not engaged in business abroad 313Chapter 9 — Input VAT 3. Partial credit for input VAT is allowed on a. Government sales b. Regular sales c. Export sales d. Exempt sales Full input VAT credit is allowed on a. Regular sales b. Export sales c. Exempt sales d. AandB No input VAT credit is allowed on a. Export sales b. Government sales c. Exempt sales d. Allofthese Which of the following input VAT can be claimed as tax refund? a. Input VAT traceable to exem pt sales Input VAT traceable to regular sales b. ¢. Input VAT traceable to sales to the government d. Input VAT traceable to export sales The input VAT on purchases of non-VAT-registered taxpayers shall b claimable as a. Tax credit within two years b. Deduction against gross income for income tax purposes © Deduction against output VAT d Any of these at the option of the taxpayer n on importation as a tax credit? a. An importer of goods for personal consumption b. An importer of goods who is exempt from the VAT on importation & An importer of goods for business use d. Any of these The transitional in, a put VAT is whi is lower of 29% is whichever is the thereon,” Pesinning vatable inventory or the actual input ¥" DS ees 2% of beginning vatable inventory or the actual input " ° thereon, 2% OF total beginning inventory or the actual input ‘ a. higher of 2% of total beginning inventory or the actual inp! 314Chapter 9— Input VAT 10. Which is included in the basis of th a. Vatable goods and proper b. Vatable goods and prope c._ Vatable goods only purct d. AandB of the transitional input VAT? ties purchased from VAT suppliers ties purchased from non-VAT-suppliers hased from VAT or non-VAT suppliers 1. Which is included in the VAT basi % transitic i q Sven oreaeeee ead of the 2% transitional input VAT? b. inventory of fruits and vegetables c._ inventory of non-food goods d. AandC 2. Which of the following properties may be included in the basis of the 2% transitional input VAT? a. Building subject to periodic provision for depreciation b. Land and other properties not subject to depreciation c. Land or building classified as inventory held for sale d. Land or building classified as property held for use 13. Which of the following input VAT may be amortized? a. Input VAT on the sale of services b. Input VAT on the purchase of goods on installment c. Input VAT on the purchase of non-depreciable property d._ Input VAT on the purchase of depreciable property 14, The amortization of input VAT on certain properties is allowed when the aggregate acquisition costs a. exceeds P1M. b. do not exceed PIM. c. exceeds P1,919,500. d. exceeds P10M. 15. The input VAT on purchases of real properties may be claimed in installment if a. the VAT seller is subject to t b. the sale of the real property is qualified as c. the seller isa realty dealer. d. the seller is a non-realty deal VAT on the installment payments. adeferred payment sale. er. heory: Part 2 1. The amortization period for depr a. whichever Is longer betwee! eciable capital goods or properties shall be 1 the actual useful life in months or 60 1 months ig shorter between the actual useful life in months or 60 months. 315Chapter 9 - Input VAT i ital goods or propert, c. 60 months if the useful life of the capital gi Properties oes, See ition regard to the actual useful life in months, d. 60 months, . -depreciable vehicles shall be cg, 2. Statement 1: The input VAT on non-dep: aimed, een Tie input VAT on construction in progress shall b camel the month billing is paid. hich is correct? y sree 1 c. Both statements b. Statement 2 4d. Neither statement 3. The withheld final VAT is a. 7% of the sales made to government. b. 5% of the sales made to government. © 7% of the input VAT traceable to the government. a. 5% of the purchases on sales made to the government. 4. Which of the following cannot claim presumptive input VAT? a. Processor of sardines b. Manufacturer of grease oil : ¢. Manufacturer of packed noodle based instant meals 4. Processor of milk 5. The presumptive input VAT is 2. 2% of primary agricultural input, b. 2% of primary marine input. & 4% of primary agricultural or marine input. 4.4% of primary agricultural input. 6 The standard input VAT is equivalent to a 7% of the sales made to government, b. 5% ofthe sales made to government, & 7% of the input VAT traceable to the government. 4. 5% of the purchases on sales made to the government. 7. The withheld final Percentage tax is a Be Sra be made to government, © 5% of the sales fae te government, 4. 3% of the purct Nases o naaleewerament n sales made to the government. 8 If the standard input var . able exceeds input VAT trace overnment sales, the excess me seta input a anitem of gross incon, Subject to income tax, 316Chapter 9 - Input VAT b. an item of deduction agai gainst gross income in i i g in income tax. c. claimable as a tax credit against other national taxes. d._ ignored since it has no further use. . 9, Statement 1: VAT-registered persons do not pay VAT on zero-rated sales. Statement 2: VAT-registered persons always pay VAT on government sales. Which statement is correct? a, Statement 1 c. Both statement b, Statement 2 d. Neither statement 40. Statement 1: The excess of the output VAT over creditable input VAT is paid to the government. Statement 2: The excess of creditable input VAT over output VAT is claimed as a tax credit or tax refund. Which statement is incorrect? a. Statement 1 c. Both statements b. Statement 2 d. Neither statement 11. The excess of creditable input VAT over output VAT is, a. VAT payable Input VAT carry-over b.. VAT refundable Standard input VAT 12. Which of the following Input VAT carry-over is creditable against output VAT of the quarterly VAT return? a. Those arising from the first month of the quarter Those arising from the second month of the quarter b, cc. Those arising from the prior quarter d. Allofthese 13, Which of the following is creditable against the input VAT of the quarterly VAT return? a. Input VAT from the first month of the quarter b. Input VAT from the second month of the quarter c. Input VAT from the third month of the quarter d. All of these Multiple Choice -Problem: Part 1 i den necklace as a gift to his 1. Andrew, a VAT-taxpayery imported a golt girlfriend, The oneign seller billed a total price of 200,000. Andrew further paid P40,000 in other landed costs ‘excluding VAT. Andrew can claim an input VAT of Ceri a PO . P25, b. P24,000 d. P28,800 317Chapter 9 - Input VAT ices from a non-VAT-registereq chased services 2. A VAT-taxpayer pul 4 - TSO cl ». The cl iy which he paid a total of P56,000 on the purchase. The claimable pr Vir v a eal ©. P6,720 b. P6000 SOO from a non-resident Person wh, taxpayer imported vatable goods - . Whois x wen condi rade or business. The goods which were intended to ber. sold in the Philippines had a landed cost of P150,000. What is the claimay, input VAT? MED c.P18,000 bP 16071 d.P19,758 ‘+ Anon-VAT registered person purchased goods invoiced at P112,000 omg VAT-registered person. The claimable input VAT shall be a PO c.P13,440 b. P12,000 4. P15,000 5. AVAT taxpayer incurred the following during the month: Consultancy fees P 700,000 Salaries expense 400,000 Supplies expense 300,000 Purchases from VAT suppliers were P250,000 supplies and P400,000 P | equipment. The equipment is expected to last for 5 years, What is the creditable input VAT during the month? a 84,000 © P 114,800 b. P114,000 4.P 162,000 6A SAT reistered Purchaser received the following billing from a VAT registered seller: Selling price P 200,000 Output VAT , Invoice price * pp ftooo 2.220,000 Wha the creditable input vary - PO ©.P23,571 bp 20,000 d. P24,000 7. AVAT taxpayer made the following Purchases during the Purchases of pods, year: exclusive of Vay P 50,000 Purchases of good: inclusive of vary ' 44300 Purchase of servic exempt from Vary 10,000 Purchase of services, inclusive of vary 520 Total Eon p 28,32 318Chapter 9- Input VAT 10. 11. 12. Whatis the input VAT? a PO ; b. 12,677 ane Alarcon { a preeica percentage taxpayer. He bought goods billed at an invoice goods in the same month VAT-registered taxpayer. Mr. Alarcon sold the a c i Foote role Me maanth at @ price of P42,000. How much input VAT is a PO ©. P2,160 b. P160 ales aa A taxpayer who became subject to VAT on the third quarter of 2020 had the following input VAT: August 2020 P 32,000 September 2020 40,000 October 2020 18,000 What is the claimable input VAT for the third quarter of 2020? a. P32,000 c. P72,000 b. P40,000 d. P90,000 Mr. Donetsk, a VAT-taxpayer, purchased the following from a VAT-taxpayer: VAT-exempt goods P 20,000 Vatable goods 40,000 Total invoice price P_60,000 Compute the input VAT allowable to Mr. Donetsk. a PO c. P4,286 b. P2,143 . P4800 Ms. Kibungan, a VAT-taxpayer, made the following purchases (net of VAT) of vatable goods during the month: Purchase from non-VAT taxpayers P 50.000 Purchases from VAT taxpayers 50,000 Total P__.300,000 is input VAT? Samco ae c.P30,000 b. P6,000 d. P 36,000 A VAt-taxpayer received and paid the following billings for vatable goods purchased: > sa000 Purchase from non-VAT taxpayers Q Purchases from VAT taxpayers 250.000 Total P_-200,000 319Chapter 9 — Input VAT 13. 14. 15. a 16. - AVAT taxpayer had the followin, What is the claimable input VAT? 786 0 c. P26, b. 75357 d. P 32,143 A VAT taxpayer had the following transactions during a first Cen quarter of 2020: ; a. Purchases of goods in January but were paid in February - P50,009 b. Purchase of services rendered in January but was paid in Februay P80,000 ©. Importation of goods which arrived in the last week of February by Was released upon payment of VAT on March - P250,000 Assume all accounts are exclusive of VAT. What is the creditable input VAT in the January 2020? a PO c. P9,600 b. P6,000 d.P15,600 What is the creditable input VAT in February 2020? a. P9600 c.P 39,600 b. P 15,600 d.P-45,600 What is the creditable input VAT for the 1 quarter of 2020? a P6,000 c.P 39,600 b. P15,600 d.P 45,600 Mr. and Mrs. Sikorsky compiled the following input VAT during a month: Input VAT on purchase of goods si ‘ P 10,000 12,000 Input VAT on purchases of services 12,000 8,000 Mr. Sikorsky is a non-VAT taxpayer while Mrs. Sikorsky is a VAT taxpayer. What is the respective creditable input VAT of a PO;PO ©. P 0; P20,000 b. P22,000; Po 4. P 22,000; P20,000 Mr. and Mrs, Sikorsky? 'g input VAT during the year: Input VAT on exempt sales t P 204,000 Input VAT on regular sales 174,000 Input VAT on export sales 150,000 Total Input VAT P.528,000 What isthe total creditable input vary a PO ©.P378,000 b. P-324,000 4. P528,000 320