NEW VAT PROBLEMS IN ACCORDANCE TO LATEST VAT LAW & RULES.

1. Moon Realty, a VAT registered company, is leasing its 20-door residential-commercial apartment in the
following manner: The 1st 10 units are being used by commercial establishments and being rented for P13,200
per month while at the back is another 10-door apartment being used as residential and being rented for
P8,000.00 per month per door. The company for the last month incurred expenses based on actual receipts in
the amount of P60,000.00 of which P49,000.00 comes from VAT registered suppliers. Based on the above data,
compute the following: (5%)

a. output tax for last month

b. Input tax for last month
c. VAT Payable (remittable) for last month

Solution:

a. Output Tax for the month

10 X P13,200.00
Output tax = ---------------------------- X 12% = P 14,142.86
112% (or 1.12)

b. Input Tax :
P49,000
Input Tax = --------------------------- X 12% = P 5,250.00
112% (or 1.12)

c. Vat Payable (Remittable) = P14,142.86 – P 5,250.00 = P 8,892.86

2. DEF Corporation, a real estate developer sold, in a month, three (3) units of house and lots valued at
P2,000,000.00, P4,000,000.00 and P3.0 Million exclusive of VAT. The company’s total purchase expenses for
the same month is P1,500,000.00 of which P1,320,000.00 came from VAT registered suppliers. Based on the
given data, compute the ff:

a. VAT payable or remittable

b. Withholding Tax

Solution: (assuming the sale were all on Cash Basis)

a. Since the units sold are house and lots (residential), only the P4.0M unit is subject to VAT. And since
the VAT is exclusive, Output Tax is:

Output Tax = P4.0M X 12% = P480,000.00

b. For the purchases, only the purchases from VAT registered suppliers have input Tax, and since there is
no mention whether VAT is included or excluded it is presumed, based on latest rules, that the VAT is
included.. Therefore Input Tax is:

P1,320,000.00
Input Tax = --------------------- X 12% = 141,428.57
112% (or 1.12)

c. VAT Payable

Vat Payable = Output Tax – Input Tax = P480,000.00 – 141,428.57 = P338,571.43

d. As to Withholding Tax:
1
 P2M unit = P2M X 3% = P 60,000.00
P4M unit = P4M X 5% = P200,000.00
P3M unit = P3M X 5% = P150,000.00

Total withholding tax for the month -- P 410,000.00

1. A VAT-registered real estate developer sold three (3) units of houses and lots whose projects are all registered
with HLURB for the month. If applicable, the developer adds 12% VAT on the gross selling price of the
property being sold. The gross selling price of the property sold on an in-house financing are:

Unit GSP inclusive of VAT 30% Downpayment Paid

1 P350,000.00 P105,000.00
2 700,000.00 210,000.00
3 4,500,000.00 1,350,000.00

Compute the following:

a. Creditable withholding tax due on the three (3) units sold.

b. Value Added Tax, if any

SOLUTION:

Since the D/P is 30%, the sale is considered deferred payment Sale and withholding tax shall be paid in full
as if cash sale.

1. There is no VAT because the selling price is below P1M. Withholding Tax is 1.5% of Selling
Price.

Withholding Tax = 1.5% of SP = .015 X P350,000.00 = P5,250.00

2. Again, there is no VAT. Withholding Tax is 3% of Selling Price

Withholding Tax = 3% of SP = .03 x P700,000.00 = P21,000.00

3. In this case, part of the Selling Price is VAT which can be computed by dividing the SP by 112%
and multiplying by 12%.

P4,500,000.00
VAT = -----------------------.X 12% = P482,142.85
112%
Therefore SP net of VAT is only P4,500,000.00 – 482,142.85 = P4,017,857.15, which is subject to
5% withholding tax

Withholding Tax = 5% of P4,017,857.15 = P200,892.85