VAT ON SALE OF GOODS, PROPERTIES, AND SERVICES

Vat on sale of real properties

- As a rule, sale of real property primarily held in

the normal course of business is subject to vat.
Output vat shall be based on the highest among
selling price, fair market value and zonal value.

Types of sale:
the sale of real property subject to vat shall either
be:
Kung papasok sa installment sale, ang output vat due
1. Cash basis – if we are the seller, we are paid in during the year will be based on the initial payment.
full right away, we need to report the entire
- If ung real property eh hindi on the ordinary
output vat rightaway
course of business, capital gains tax yun.
2. Deferred payment basis – utang, if ratio ng
initial payment over gross selling price ay
lalagpas ng 25%
3. Installment basis – utang, if ratio ng initial
payment over selling price ay hindi lalagpas ng
25%

Deferred sale – transaction shall be treated as cash sale

which makes the entire selling price taxable in the
month of sale. Output tax shall be recognized by the
seller and input tax shall accrue to the buyer at the time
of the execution of the instrument of sale. Payments
subsequent to initial payments shall no longer be
subject to output vat.

- Kahit pinautang mo yan pero exceed 25% you

need to report parin yung output vat during the
month of the sale.

Installment sale – initial payment does not exceed 25%,

the buyer of the property can claim the input vat in the
same period as the seller recognizes the output tax.

- the real estate dealer shall be subject to VAT on

the installment payments, including interest - Use 5.2 m x 12% report on June 1,2021 – pasok
and penalties actually andor constructively sa 2nd quarter IF CASH SALE
received by the seller.
- Report mo na output vat ay will only pertain to
your collection, hindi mo need ireport ung
output vat ng buong selling price
 FOR ITEMS 2,3,4 are now subject to 12% vat under
sec.31 of RA10963 (TRAIN Law) but only upon
satisfaction of the following: (2 req)
- If 40% then deferred yan, lahat irereport mo on
the month of June.
EXPORT SALE OF GOODS AND SERVICES
Cross-border doctrine
- Vat only imposed in the ph (destination
principle)
- Kapag nagbenta ka outside of your territorial
jurisdiction, walang iimpose na vat
- If the exporter is not vat registered the export
sales is vat exempt, therefore not entitled to vat
- If the exporter is vat registered, the export sale
is subjected to vat. The rate to be imposed is 0%
vat, output vat is 0 para hindi masira yung
cross-border doctrine. Pero entitled na sa input
vat, input vat can be refunded
(INPUT-PURCHASES, OUTPUT-SALES)
- Technically, vat registered or hindi, walang vat
na maiimpose, kasi nga yan ay sale abroad
VAT REG=0% NON-VAT REG=VAT EXEMPT
Output vat P0 output vat none
Input vat credit (xxx) input vat credit NA
Vat payable (Pxxx)
(vat payable) may be:
1. Refunded
2. Deducted from output vat of domestic sales
3. TCC
EXPORT SALE OF GOODS [sec 106(A)(2)(a)]
(pag nakared, before train law export sale yan, pag train
law hindi na siya export sale kung mamemeet yung 2
requirement)
a. Successful establishment and implementation
of an enhance refund system that grants
refunds of creditable input tax within 90 days
from the filing of the vat refund application with
the BIR; The 90 day period to process and
decide, pending the establishment of the
enhanced VAT Refund system shall inly be up t
the date of approval of the recommendation
report on such application for vat refund by the
commissioner or his duly authorized
representative
b. all pending vat refund claims as of dec 31, 2017
shall be fully paid in cash by dec 31, 2019
- if nameet na tong2 req at train law na, then hindi
na siya 0% rated, 12% rated na siya
1. Sale and actual shipment of goods from the ph
to a foreign country
- Dinala mo yung goods from ph to abroad and
will be paid acceptable foreign currency
2. Sale of raw materials and packaging material to
a non-resident buyer (buyer from abroad) for
delivery to a resident local export oriented
enterprise (pero idedeliver mo sa isang eoe sap
h) to be used in manufacturing, processing,
packing or repacking in the ph of the said
buyer’s goods, paid for in acceptable currency
and accounted for in accordance with the rules
and regulations of the BSP.
- Ex: pinas exporter ay manufacturer or processor
exporter ng sardinas, yung mga prinoproduce
na sardinas ay dinadala abroad, so pasok sa
number 1 export sale, pero may client siya sa
abroad- gi joe, na hindi natuwa sa inorder niya
na sardinas sa packaging so nagkasunduan sila
na they will look for raw materials or packaging
materials, halimbawa si gi joe ang nakahanap at
ang nahanap niyang supplier e taga pilipinas
din, si supplier na nahanap ay idadala yun kay
pinas exporter at hindi abroad, that explains the
no.2
3. Sales to export-oriented enterprises which the
code considers as export sales at the level of the
supplier of raw materials. The sale is considered
zero rated only if the sale of raw materials or
 packaging materials is made to an export
oriented-enterprise whose export sales exceed
70% of actual annual production.
- Assume that yung nakahanap kay supplier ay si
pinas exporter, at siya nagbebenta ng raw
materials kay pinas exporter, if yung export
sales ay lagpas 70%, 0 rated siya if before train
law, if below 70% naman 12% na. supplier to
4. Export sales under executive order no.226,
otherwise known as the omnibus investment
code of 1987 and other special laws.
- Under the law, may listed items for export sales
kahit hindi naman pinadala abroad.
5. Sale of goods, supplies, equipment and fuel to
persons engaged in international shipping or
international air transport operations. (yung
binentahan ay engaged dyan at gagamitin nila
sa operation niya)
EXPORT SALE OF GOODS [sec 106(A)(2)(b)]
Sales to entities exempt under a special law or
under international agreements to which the ph is a
signatory effectively subjects such sales to zero rate.
i.e. sale to ADB; sale to IRRI
Effectively zero rated sales - refer to the sale by a
vat registered seller to a person who was granted
indirect tax exemption under a special/international
law/agreement. However, the exemption of the
entity does not extend to its personnel and guests
with respect to the vat that may be passed on to
them by their suppliers
-vat registered seller ay nagbenta sa isang entity na
may exemption under international
law/agreement/treaty/special law.
Ex: ako ay vat reg entity engaged sa construction at
may inayos sa AD Bank, services rendered to adb
will not be subject to 12% but rather 0% kasi under
the law zero rated ang adb
Export sale of services [Sec 108(B)]
1. Processing, manufacturing or repacking goods
for other persons doing business outside the ph
which goods are subsequently exported, where
the services are paid for in acceptable foreign
currency and accounted for in accordance with
the rules and regulations of the BSP.
- Ex: EDT corp, sila nagprocess, manufacture,
repack para sa client abroad pero hindi sila yung
mageexport, ex si pinas exporter yung
mageexport
2. Services performed by subcontractors and/or
contractors in processing, converting, or
manufacturing goods for an enterprise whose
export sales exceed 70% of total annual
production.
- You rendered services to an export-oriented
enterprise whose annual production more than
70% ay ineexport abroad
3. Services other than those mentioned in item #1
rendered to a person engaged in business
conducted outside the ph or to a nonresident
person not engaged in business who is outside
the ph when the services are performed, the
consideration for which is paid for in acceptable
foreign currency and accounted for in
accordance with the rules and regulations of the
BSP.
- Yung hindi nagfafall sa number 1 na services
(processing, manu, repacking) magfafall dito,
still 0%
4. Services rendered to persons or entities whose
exemption under special laws or international
agreements to which the ph is a signatory
effectively subjects the supply of such services
to 0% rate.
- Eto rin ung effectively 0 rated, kanina nga lang
ay goods eto naman services.
5. Services rendered to persons engaged in
international shipping or international air
transport operations, including leases of
property for use thereof.
- para sa domestic operation 12% na yan
6. Transport of passengers and cargo by domestic
air or sea vessels from the ph to a foreign
country
- Phil airlines, punta sa America, yung pamasahe
sa America 0% vat, eto ang carrier ay domestic
7. Sale of power or fuel generated through
renewable sources of energy such as, but not
limited to, biomass, solar, wind, hydropower,
geothermal, ocean energy, and other emerging
energy sources using technologies such as fuel
cells and hydrogen fuels.
VAT ON SALE OF GOODS AND SERVICES
Coverage of VAT Tax Exclusive Method – vat is presumed not yet
included in the tax base amount. Such amount
I. Sale
representing the taxable base (exclusive of vat),
1. Sale of goods and properties
whether gross sales or gross receipts, is multiplied by
2. Transaction deemed sale (TDS)
12% vat rate. The resulting product is the output vat
3. Sale of services and use or lease of
due or output tax, as the case may be.
properties
II. Importation Sec 106(A)(1)

Sale of goods or properties [sec 106(A)(1)] - The term “gross selling price” means the total
amount of money or its equivalent which the
There shall be levied, assessed and collected on every
purchaser pays or is obligated to pay to the
sale, barter or exchange of goods or properties, Vat
seller in consideration of the sale, barter or
equivalent to 12% of the gross selling price/gross value
exchange of the goods or properties, excluding
in money of the goods or properties sold, bartered or
the vat. The excise tax, if any, on such
exchanged, such tax to be paid by the seller or
goods/properties shall form part of the selling
transferor.
price.
1. The term “goods” or “properties” shall mean all - Yung i12% vat mo, selling price plus excise tax
tangible and intangible object which are but prior to the imposition of the vat, wag
capable of pecuniary estimation and shall isama yung vat. Ex: ako si jollibe ang selling
include: price without the vat is 100 pesos ung 12%
- obviously subject to vat ALL in ordinary course multiply sa 100 plus excise tax
of business unless exempted
- Pag nagbenta ng goods or properties, sales
subjected to vat of what? Selling price

Pecuniary/monetary

Some:

a. Real properties help primarily for sale to

customers or help for lease in the ordinary
course of trade or business.
- Kasi diba if the real property that u sold was not
held for sale or lease in the ordinary course of Inclusive – kasama na ung vat
business, capital asset yun tas kapag binenta
Exclusive- hindi pa kasama ung vat
capital gains tax yun.
b. The right or the privilege to use patent, Invoice value – the value provided should be inclusive of
copyright, design or model, plan, secret formula the vat but kung ang sabi ay sales, sales acc, selling
or process, goodwill, trademark, trade brand or price. – it must be exclusive.
other like property or right.
100% for sp 12% for vat
- Ex: Jollibee, nagfranchise ako so I will be paying
franchise fee subjected to 12% vat Computation of VAT
c. The right or privilege to use in the ph of any
OUTPUT VAT
industrial, commercial or scientific equipment
d. The right or the privilege to use motion picture - Actual sale of goods, services or properties in
films, tapes and discs the ph
e. Radio, television, satellite transmission and - Transaction deemed sales
cable television time. - Zero rated (0%) sale
Computation of VAT on sale of goods Basis of 12% VAT
- Sale of goods = gross sales
- Sale of service = gross receipts/collection
- Sale made by a dealer in securities = gross
income
- Sale of real properties = the highest amount
among selling price, fair value provided by the
city/provincial assessor, and the zonal value
provided by the CIR
- Vat is characterized also by credit invoice
method=input vat ng binili mo idededuct mo sa
output vat na binenta mo ung sobra ireremit sa - Pag services diba gross receipt not revenue
bir

- Hindi pwedeng ung output vat mo eh galling

- Deferred input vat – mas Malaki input
- If mas Malaki input pwedeng icarru over next
quarter
- Pag net x12 pag gross divide 12/112
lang din sa nacollect mo (services) at ng input
vat mo galling sa binayad mo (purchases)
- Kung ang output vat on sale of goods based on
gross sales, ang output vat sa sale of service
based on receipts, baliktarin lang s ainput vat.
- Kung purchase mo ay goods then based on
gross purchases, services= based sa payment
mo.

Transactions deemed sale – under section 106(B) of the

tax code, certain transactions which are not actually
sales because of the absence of actual exchange
between the buyer and the seller, are considered or
included in the term “sale” for vat purposes
Sale of Services [Sec 108(A)(1)]
- Sale of goods : actual sale of goods (nagbenta ka
- The phrase “sale or exchange of services” talaga) and transactions deemed sale
means the performance of all kinds of services (kabaligtaran ng actual, you really did not sell.
in the ph for others for a fee, remuneration or However shall be considered sale in the
consideration. Except those under section 119 ordinary course)
- Deemed “as if”

Transactions Deemed Sale

1. Transfer, use or consumption not in the course

of business of goods or properties originally
intended for sale or for use in the course of
business. Transfer of goods or properties not in
the course of business can take place when
 VAT-registered person withdraws goods from
his business for his personal use.
- Pag transfer, paggamit, pagconsume sa hindi
normal na pamamaraan ng mga pambenta in
the ordinary course nor for use in business. Ex:
ikaw sis an mig corp. nagmamanufacture ka san
mig light, October fest now etong mga san mig
light pambenta mo to eh kaso dahil oct fest,
alam ng mga tao libre or discounted, ang
ginawa mo instead na ibenta mo binigay mo for
free.
- Pambenta siya in the ordinary course pero di
mo binenta, binigay mo nalang to be short
- Ex: aircon should be in the ordinary course of
business kaso nilagay mo nalang sa bahay kasi
hindi kasya.
2. Distribution or transfer to:
- Shareholders or investors share in the profits of
VAT-registered person
- Creditors in payment of debt;
- Ex: shareholder ka instead na mareceive mo na
dividend e pera, eh binigay 10 wheeler truck ng
san mig light
- Instead na ipangbenta mo pinambayad mo ng
utang
3. Consignment of goods if actual sale is not made
within 60 days following the date such goods
were consigned
- Diba kasi pag consignment inventory mo parin
palang, hindi pa nabebenta so dito may 60 days
na dapat within those days nabenta na ng
consignee.
4. Retirement from or cessation of business with
respect to all goods on hand, whether capital
goods, stock-in-trade, supplies or materials as of
the date of such retirement or cessation,
whether or not the business is continued by the
new owner or successor.
- Kung yung Negosyo ay magliliquidate na,
syempre ibebenta mo lahat yan, ung inventory
eh ibebenta mo naclaiman mo ng input vat yan.
So it must be treated as sale.
- Capital goods = ppe

BAKIT DEEMED SALE? Kasi bago mo ibenta, nilagyan mo

na ng input vat mo, tas in the end eh binigay mo nalang
nga siya.