BUSINESS TAXES Statement 2: A non-resident foreign person performing

isolated transaction in the Philippines shall be liable to

- Imposed upon onerous transfers (may kapalit)
vat
- Sale, barter, exchange, importation
Answer: both true
Onerous transfer (types of sales)

1. In the ordinary course of trade or business

- business tax – on the sale itself regardless of the
result of the transaction
 addition to income tax
- income tax – income derived from sale
2. Not in the ordinary course of trade/business
- Income tax only

Bsuiness Tax Transfer tax

Sale- with exchange Donation/without
consideration Nra not enganged in trade or non-resident foreign
“In the course of trade or business” – regular conduct or corporation – final vat (wag ibigay ung 120T,
pursuit of a commercial or an economic activity, Makabayan kung sino ung nagavail ng services,
including transactions incidental thereto, by any person, magreremit sa BIR)
regardless of whether or not the person engaged
Failure to remit to bir - hindi liable ung nagbigay ng
therein is a non-stock, non-profit private organization or
service but the one who availed
government entity. (RR 16-2005) (even government)
250,000 – final withholding tax sa services
Exception: sale of service by a nonresident foreign
person

Incidental – example: nagbebenta ka ng mga sasakyan,

pero ung truck na ginagamit mo for services eh luma na
at binenta mo, it is incidental, therefore still subjected
to business tax.

Example: accounting firm lilipat ng lugar, aircon

on sale

“Isolated transactions” – generally NOT considered in

the ordinary course of trade or business, hence, not
subject to business tax. Services rendered in the Marginal Income Earner
Philippines by a non-resident foreign person shall be
- Individuals nagnenegosyo naman pero maliit
considered as being rendered in the course of trade or
yung benta in a year 100,000 and below
business even if the performance is not regular.
- “For subsistence or livelihood” para lang
Exception: services by a nonresident foreign person mabuhay
- Train law not exceeding 250,000, exempt to
Example: pldt decided to avail services of g-ijo American
income tax
resident of america
Types of Business Taxes
Illustration #1:
1. VAT – ordinary course of trade//business unless
Statement 1: for a person to be subjected to any
exempt, if exempt it may be subjected to other
business tax, it is necessary that he is regularly
percentage taxes except marginal income
enganged in the conduct or pursuit of an economic
earner
activity.
 2. Other percentage taxes – vat exempt but listed 1. Seller of goods/properties
in opt 2. Seller of services/lessors of properties
3. Excise taxes – SIN PRODUCT, alcoholic non 3. Importers
essential goods like jewelries automobile, non-
Importation transfer made by a tax-exempt entity to
essential service like medical surgery. Imposed
none-tax exempt entity
on manufacturer and importers. Production of
alcoholic products – pagproduce or - Shall be subject to vat, the none-exempt shall
manufacture, but the moment to sell it that is be considered as the importer and shall be
subjected to vat. Excise only to manufacturer or liable for the unpaid vat.
importer.
Commodities/service subject to Excise Tax

1. Alcohol products
- Distilled spirits
- Wines
- Fermented liquor
2. Tobacco products
3. Petroleum products
4. Miscellaneous articles
- Non-essential goods (jewelries, perfume; yachts
and other vessels intended for pleasure or
Isa lang, either vat or opt unless under mixed or sports)
different/ not on the same business. - Automobiles
- Non-essential service
Vat exempt sale under sec. 109(a) - Sweetened beverages
Sale or importation of: 5. Mineral products

- Agricultural and marine “food products in their
original store”
- Livestock; and
- Poultry of a kind generally used as, or yielding
or producing foods for human consumption and
breeding stock and genetic materials therefore.
“sale or lease of goods or properties or the
performance of services other than the transactions
mentioned in the preceding paragraphs, the gross
annual sales and/or receipts do not exceed the
amount of 3m”
Tax effect (business tax)
-exempt from vat, but included in the list of
transactions subject to OPT, subject to 3% opt
Kinds of VAT
Kinds of excise tax (as to amount)
1. Vat on sale of goods or properties
2. Vat on sale of services and/or lease of
properties
3. Vat on importation-business related or not
Persons liable to VAT
Medical surgery (non-essential service)
- Medical service of cosmetic surgery procedures
done by plastic surgeons is now subject to
excise tax under the TRAIN LAW (5%)
- Cosmetic surgeries
- Invasive cosmetic procedures (surgery is done
inside the body through an anatomical opening)
Examples of procedures that fall under this tax
include
- Liposuction
- Lip injections
- Rhinoplasty
- Breast augmentation
- Facelift
- Hair restoration
1. Ad-valorem tax – excise tax which is based on
selling price or other specified value of the
goods/articles (20% before add excise tax and
vat)
 Ex. Income tax, donor’s tax, vat, percentage tax,
estate tax
2. Specific tax – excise tax imposed which is based
on weight or volume capacity or any othe
physical unit of measurement
Ex. Sin products non-essential goods
TYPES OF REGISTRATION
CHARACTERISTICS OF VAT
Mandatory Vat Registration
1. Indirect tax – business taxes are indirect tax,
buyers to consumers
Example: 7/11
2. Consumption-based – shouldered by the
consumer/end-user
- End user of consumer goods/services which
ultimately shoulders the tax as liability, vat thus
forms a substantial portion of consumer
expenditures
- Example: 100 vat from raw materials corp >200
pinasa> wholesaler (100 nalang ireremit ni corp
kay bir, walang ginastos galling sa bulsa si corp)
>retailer > end-user
LIABLE TO VAT -SELLER
BURDEN OF THE TAX – BORNE BY THE FINAL
CONSUMER
3. Imposed on the value-added in each stage of
production and distribution process
(may vat sa bawat stages, production ganern)
VAT – a tax on the value added by ever seller to
the purchase price or cost in the sale /lease of
goods/property/services in the ordinary course
of trade/business.
4. Collected through the “tax credit method” or
“invoice method”/”credit-invoice method”
- Vat payable is computed by deducting the input
vat from the output vat.
- Ex: yung 100 vat sayo tas pinasa mo ng 200,
deduct input 100 from 200 output=100 vat
liable
1. Mandatory registration – required, no choice si
tax payer
2. Optional registration – not mandated by the law
to register nonetheless you have the option to
register although you are not required
- Any person or entity who in the course of his
trade or business, seels, barters, exchanges,
leases goods or properties and renders services
subject to vat, if the aggregate amount of actual
gross sales or receipts exceed 3M beg jan
1,2018 under RA10963(TRAIN Law, previously
1,919,500) for the past 12 months (other than
those that are exempt)
(tax payers na engaged as stated above ay
required na magregister if lagpas 3m yung
annual sales-goods/receipts-service, pag hindi
lagpas-optional)
- There are reasons to believe that the gross
sales/receipts for the next 12 months will
exceed 3m (based sa ano ba ang palagay mo
ang magiging sales/receipts mo for the next 12
months if magstart ka palang ng business)
- Radio and/or television broadcasting companies
whose annual gross receipts of the preceding
year exceeds 10M (kung mga nakaraang taon
10m)
Penalties for non-registration of those required to
register
a. The taxpayer shall be liable to pay the tax as if
he were a VAT-registered person but he cannot
 avail the benefits of input tax credit for the
period he was not properly registered.

Example: sa 7/11 hindi nagregister, wala siyang

karapatang ipasa ung vat to consumer, siya dapat
magbayad since hindi siya nagregister. Ikaw magbayad
ng input and output vat.

b. The commissioner of the internal revenue or his

authorized representative may order
suspension or closure of business establishment
for a period of not less than 5 days for any of
the following violations: Domestic common carrier by land, transport of
- Failure to issue receipts or invoices passengers not subject to vat but to percentage tax
- Failure to file vat return (section 117 not 116)
(Temporary closure ang pwedeng mangyari)
Poultry feeds for human consumption is not subject
OPTIONAL VAT REGISTRATION to business tax.
- Any person who is VAT-exempt or not required Magasawa – separate tax payers
to register for VAT may elect to be VAT-
registered by registering with the RDO that has
jurisdiction over the head office of that person,
and pay the annual registration fee for every
separate and distinct establishment. Any person
who elects to register under optional
registration shall not be allowed to cancel his
registration for the next 3 years. It may be
revoked after 3 years balik ka to percentage tax
– 3%
(vat exempt dito is hindi lang lagpas ng 3m hindi
yung katulad ng nagtitinda ng gulay na
exempted for vat. If di lagpas 3m not required
to register pero may option ka if want mo
magregister)
- Any person who is VAT-registered but enters
into transactions which are exempt from VAT
(mixed transactions) may opt that the VAT apply
to his transactions which would have been
exempt under Section 109(1) of the tax code.
- Franchise grantees of radio/television na hindi
nagexceed ng 10 may have options but once
exercised, hindi na marerevoke.