SELF-PACED LEARNING MODULE

COLLEGE DEPARTMENT

MODULE 6
Subject:

BUSINESS TAX

AISAT COLLEGE – DASMARIÑAS, INC.

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 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs Page |2

INFORMATION SHEET PR-6.1.1

“COMMON VAT RULES ON SALE OF GOODS,PROPERTIES AND SERVICES-1”

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs Page |3

THE SALES INVOICE

There are two kinds of sales invoices, namely:

(a) BIR-approved pre-printed sales invoice and
(b) BIR - approved computer generated sales invoice.

A Model: Pre-printed BIR-approved Sales Invoice A Model: Computer-Generated Sales Invoice

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs Page |4

Selling Price, VAT included P 1,120

Less: Value-added tax ( P1,120 x 12/112) 120
Balance P 1,000
Less: 20% discount to senior citizen 200
Selling Price P 800

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs Page |5

A Model : The pre-printed sales invoice issued to a senior citizen

Step 1 .Compute the VAT component on the stated selling price.

Step 2. Remove the VAT component of the stated price
Step 3. On the balance after Step 2, remove the 2-% discount
Step 4. After Step 3 is the price the senior citizen will pay;
Step 5 Ask for the senior citizen ID.
Step 6. Get the senior citizen ID number;
Step 7. Have the senior citizen sign the sales invoice,
 12/112 x P2,400 = VAT of P 257.14

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs Page |6

These reproduced computer-generated sales invoices, by eateries in a fast food court.

It is unusual that assuming a sale of two senior citizens, there is one sales invoice only, each senior
citizen with a 20% discount and each senior citizen asked to sign the sales invoice on a blank his or her
printed name.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs Page |7

INFORMATION SHEET PR-6.1.2

“COMMON VAT RULES ON SALE OF GOODS, PROPERTIES AND SERVICES-2”

INPUT TAXES ON THE PURCHASE OF CAPITAL GOODS

What are the capital goods? Capital goods are goods with estimated useful life of more than one year
and which are subject to depreciation (or amortization) under the income tax law, used directly or
indirectly, in the production and sales of taxable goods or services.

If the aggregate cost of the capital goods purchased or imported in a calendar

month does not exceed one million pesos (1,000,000) the input tax of each
asset will be allowed in the month of purchase.

If the aggregate cost of the capital good purchased of imported in a calendar

month exceeds one million pesos (P 1,000,000), the input tax on each asset
will be amortized monthly over its life in months, but not to exceed sixty
months.

In other words, over the life of the asset in number of months, or sixty
months, whichever is shorter

Example 1. A VAT taxpayer made a purchase on June 2m 2018 of machinery for use in the business.

(a) If the acquisition cost VAT not included, was P500,000 and its useful life is in ten
years, how much was the input tax for June 2018?
Answer : P500,000 x 12% = P60,000

(b) If the acquisition cost, VAT not included, was P3,000,000 and the useful life is ten
years. How much was the input tax for June 2018?
Answer : P 3,000,000 x 12% = P 360,000
P 360,000 / 60 months = P 6,000

(c) If the acquisition cost, VAT not included, was P3,600,000 and the useful life was
three years. How much was the available input tax for June 2018?
Answer : P3,600,000 x 12% = P 432,000 / 36 months = P 12,000

(d) If the acquisition cost, VAT, not included, was P3,600 and the useful life was three
years, how much was the available input tax for June 2018?
Answer: P 3,600,000 x 12% is P 432,000: P 432,000 / 36 months = P 12,000

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs Page |8

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs Page |9

When an asset with an unamortized input tax is retired from business, the unamortized
input tax must be closed against the output taxes.

Example 2. On March 1,2017 , A VAT taxpayer made a purchase of a fixed asset with a useful life of 6
years for P2,000,000, not including VAT. On March 1, 2018, the asset was sold for P 1,000,000. Sales in
March 2018 amounted to P3,500,000. VAT not included, while purchases from VAT suppliers amounted
to P 1,800,000. VAT not included. How much was the value-added tax payable for the month?

Construction in progress (CIP). CIP is the cost of construction which is not yet completed. CIP
considered a purchase of services, the value of which will be determined based on the progress
billings. Input taxes on such transaction will be recognized in the month that payment was made on
the progress billing. In case of a contract for the sale of service where only labor will be supplied by
the contractor and the materials will be purchased by the contractee from other suppliers, input tax
on the labor will be recognized in the month that payment was made based on progress billings,
where input tax on the purchase of materials will be recognized at the time that the materials were
purchased.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 10

Example 3. If there was a CIP for a depreciable asset for use in business with the following data. The
taxpayer will purchase needed materials as needed, and the Vat contractor will furnish labor for a
contract price of P 2,000,000 on which there would be progress billings. If in a month, the taxpayer
purchased materials ( VAT not included) of P500,000 and paid the contractor P400,000 (VAT no
included) on the progress billing, how much will be the input taxes?

Answer:
On materials ( P500,000 x12 %) - P60,000
On Labor ( P 400,000 x 12%) 48,000
Input Taxes P108,000

INPUT TAX ALLOCATION

Rule: Allocation will be on the basis of sales.

(a) When a taxpayer with a VAT business and a non-VAT business makes a purchase during a
month from a VAT registered person, for use in both his VAT and non-VAT business, the input
tax on the purchase will be allocated between the VAT and non-VAT business.

(b) When a taxpayer with domestic and export sales makes a purchase during a month from a
VAT registered person for his domestic and export sales, the input tax on the purchase will be
allocated between 12% rated sales and 0% rated sales. The input tax allocable to export
sales is refundable or creditable against other internal revenue taxes due from the
taxpayer.

(c) When a VAT – registered person sells good or properties or services to the Government or
any of its political subdivision, instrumentalities or agencies, including government-owned or
controlled corporations (GOCCs) ( subject to 5% final VAT) the input taxes on purchases will
be allocated between the sales to the public and the sales allocated to Government, etc. and
the VAT input tax allocated the later will be cost or expense to the seller.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 11

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 12

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 13

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 14

TRANSITIONAL INPUT TAX

When a taxpayer who is not subject to the VAT becomes subject to the VAT because:
(A) The gross sales of the preceding year exceeded three million pesos ( P 3,000,000) or
(B) The taxpayer being exempt from the VAT system, opted to be registered under the VAT system.

He will be allowed an input tax on his inventory on the transition date.

On what, and at what , is the transitional input tax?

For a previously VAT-exempt person who transitioned into a VAT taxpayer, he will be allowed
transitional input tax on his inventory on the transition date of:
a) Goods,
b) Materials and
c) Supplies,

Equivalent to:
Two percent (2%) of the inventory value
Or the value-added tax actually paid on it,
Whichever is higher.

There is no transition input tax on:

a) Services;
b) Capital goods
c) Goods that are VAT exempt under Section 109 of the National Revenue Code

Example 4.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 15

Reference Book:
A study on Business Taxes and Transfer Taxes
under the Train Law
Virgilio D. Reyes

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 16

2018 Edition

STUDENT NAME: __________________________________ SECTION: __________________

PERFORMANCE TASK PR-6.6.1

PERFORMANCE TASK TITLE: : PROBLEM SOLVING IN VAT ON SALE OF GOODS,PROPERTIES and SERVICES

PERFORMANCE OBJECTIVE: After completing this performance task, you were being knowledgeable in the
• computation of VAT on goods, properties and services.
• able to identify goods or products that VAT exempt.
TOOLS AND MATERIALS: Modules, internet.

EQUIPMENT : none

ESTIMATED COST : none

PROCESS / PROCEDURE
Solve the following:
1. Mr. F made a sale to senior citizen of goods on which VAT exemption is provided by the senior
citizen law. The goods were sold to the general public VAT included at P2,280. How much must
the sale to the senior citizen would be?

2. Sale of food and soft drinks to the senior citizen were , on prices VAT included:
For food P 150
For soft drinks 30
A senior citizen had a 20% discount.
What and how much were shown in the sales invoice?

3. G Co purchased several fixed assets in a month.

Asset No. 1 ( useful life of 8 years) P 900,000
Asset No. 2 ( useful life of 3 years) 720,000
Asset No. 3 ( useful life of 10 months) 200,000
Asset No. 4 ( useful life of 2 years) 400,000
Input taxes for the month? _________________

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 17

4. Mr. L is a taxpayer with VAT and non-VAT business. He had the following data, VAT not included, in
a VAT taxable period.
Sales, VAT business P 3,000.000
Sales, non VAT business 2,000,000
Purchases of goods, from VAT suppliers, for VAT
Business and Non-VAT business 1,000,000
How much was the input tax? __________________
How much was the VAT payable? __________________

5. Research on goods/products that are VAT exempt under Section 109 of the National Internal
Revenue Code. ( Question No. 5, answer must be typewritten. )

Instructions :

● Problem solving: Show your computation. Must be handwritten only.

● Question No. 5, answer must be typewritten.
● Use short bond paper only.
● Task must be neat and presentable. No erasure.

PRECAUTIONS : • Indicate references in your performance task (i.e., https//www.wikipedia.com, etc…)

•Avoid copy and paste performance task of other
ASSESSMENT METHOD : PERFORMANCE TASK CRITERIA CHECKLIST

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Business Tax
COMMNON VAT RULES ON SALE OF GOODS, PROPERTIES
Module
AND SERVICES -1 and 2
AE25-BT BUSINESS TAX Units: 3hrs P a g e | 18

STUDENT NAME: _____________________________________ SECTION: ___________

PERFORMANCE TASK CRITERIA CHECKLIST PR-6.6.1

Did I … CRITERIA SCORING
1 2 3 4 5
1. Logic and key points. All corresponding ideas about the topic are
logically presented.
2. Content. Content of the essay flows and is passionate.
3. Cleanliness. Very clean and well presented.
4. Spelling and Grammar. No error in spelling and grammar.
5. Word usage. Word choice and usage are professionals.

GRADES

Teacher’s Remarks □ Quiz □ Recitation □ Project

5 - Excellently Performed
4 - Very Satisfactory Performed
3 - Satisfactory Performed
2 - Fairly Performed
1 - Poorly Performed

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 6th
MIDTERM
6 Meeting JULIETA S. ECHEGOYEN MR. WILBERT A. MAÑUSCA
Subject Teacher School Director