Lavilla, Ricky H.

BSBA FM-2

CHAPTER 6: SELF TEST EXERCISES

Discussion Questions

1. Describe the scope of vatable sales.

 The VAT covers all vatable sales of goods, properties, services, or lease of properties by
VAT Taxpayers.

2. Enumerate those VAT-exempt transactions under the NIRC.

 As a rule, any person who, in the course of trade or business, sells barters, exchanges,
leases of goods or properties, render services and any person who imports goods shall
be subject to the value added tax. Being an indirect tax that sellers may pass-on, prices
would tend to escalate with the application of value added tax in the Philippines with
respect to prime commodities, basic needs and other preferred goods and services.

3. Discuss the applicability of the VAT on sales.

 A VAT registered person will be subject to VAT even if its annual sales do not exceed the
VAT threshold. A registrable person or those whose sales or receipts exceed the VAT
threshold without registering as VAT taxpayers are subject to VAT without the befit of
an input tax credit.

4. What are the two VAT thresholds? Discuss the rule on registration for each threshold.

 The general threshold which amounts to 3,000,000 and the covered taxpayer is
applicable to all taxpayers other than franchise grantees of radio or television. The other
one is the special threshold which amounts to 10,000,000 and applicable only to
franchise grantees of radio or television.

5. Illustrate the application of the VAT threshold to persons who exceed the VAT threshold
during the year.

 If he makes a written application and can demonstrate to the commissioner’s

satisfaction that his gross sales or receipts for the following twelve (12) months, other
 than those that are exempt under Section 109 (A) to (U), will not exceed Three Million
Pesos (P3,000,000); or if he has ceased to carry on his trade or business, and does not
expect to recommence any trade or business within the next (12) months.

6. Enumerate other instances of vatable sales.

 Sales of registrable persons

 Sales of NON-VAT taxpayer who issues VAT invoice receipts
 Exempt sales billed by VAT taxpayer as regular sales.

7. What are the classifications of vatable sales? How do they compare in terms of
treatment of output VAT and input VAT?

 The sales to the government but has limited claimable input VAT. The zero rated
sales and has no output but with claimable input VAT. And the exempt sales with
no input Vat and no claimable input VAT.

8. Illustrate the reporting of the value added tax in each taxable quarter.

 Total Output VAT Tax due or Total Vatable Sales/Receipts x 12%

 Less: Total Allowable input Tax or Total Vatable Purchases x 12%
 Equals: VAT Payable

9. Discuss the invoicing requirements of VAT registered taxpayers.

 A VAT invoice for every sale, barter, or exchange of goods or properties;

 A VAT official receipts for every lease of goods or properties and every sale,
barter or exchange of services.
Drill Exercises

1.Seller of agricultural food products Exempt

2.Furniture shop Vatable
3.Vegetable trader Exempt
4.a private high college Exempt
5.a private hospital Exempt
6.a dentist Vatable
7.Hospital drugstore Vatable
8.a non-profit elementary school Exempt
9.a government college Exempt
10.restaurant Vatable
11.Bus operator % Tax
12.Hotel Vatable
13.Operator of domestic sea vessel Vatable
14.Life insurance company % tax
15.Mall Vatable
16.domestic airliner Vatable
17.Lessor vessels or aircraft Vatable
18.Banks % tax
19.Operator of taxi % tax
20.Intternational carrier % tax
21.keepers of garage % tax
22.book publishers Exempt
23.Quasi-banks % tax
24.Dealer of household appliances Vatable
25.Dealer of commercial lot Vatable
26.Insurance agent Vatable
27.Employee Exempt
28.Contractor Vatable
29.Processor of sardines Vatable
30.Auto parts dealer Vatable
31.Manufacturer of hog feeds Exempt
32.seller of fertilizer and seeds Exempt
33.fisherman Exempt
34.fish vendor Exempt
35.Textile manufacturer Vatable