A.

VAT

1. What are the allowable deductions from the gross selling price?
 
- Individuals engaged in business or the practice of a profession, and who opted to be
taxed at the regular graduated income tax rates, the following expenses are allowed as
deductions from gross income which all ordinary and necessary expenses paid or
incurred during the taxable year in connection with the trade, business, or profession,
including raw materials, supplies, and direct labour.
 
2. What are the “transactions deemed as sale” subject to VAT?
 
- Transactions deemed sale:
  
I.           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.
II.         Distribution or transfer to:
 
- Shareholders or investors as share in the profits of the VAT-registered persons;
or Creditors in payment of debt
 
III.        Consignment of goods if actual sale is not made within 60 days following
the date such goods were consigned.
IV.       Retirement from or cessation of business, with respect to investment of taxable
goods existing as of such retirement or cessation.
 
3. What is the tax based of VAT on the transactions deemed as sale?
 
- The tax is equivalent to a uniform rate of 12%, based on the gross selling price of
goods or properties sold, or gross receipts from the sale of services.
 
4. When is VAT imposed on importation of goods?
 
- Importation of goods is subject to a 12% VAT based on the
total value used by the Bureau of Customs in determining tariff and
customs duties, plus excise taxes, if any, and other charges which shall
be paid prior to the release of the goods from customs custody:
Provided, That where the customs duties are determined on the basis
of the quantity or volume of the goods, the VAT shall be based on the
landed cost plus excise tax, if any.
 
5. Who pays for the tax on importation of goods?
 
- The Importer
 
 
 
 
6. Who is an importer?
 
 - Importer is an individual or a firm authorized by the government of respective country to
act as an 'Importer' to bring goods or services in a country from outside countries. The
importer is responsible completing necessary legal import customs clearance
procedures and formalities on arrival of goods in to a country.
 
7. What is the tax base of VAT on importation?
 
- Imported goods are liable to VAT at the same rate as applies to similar goods sold
within the State
 
8. Give a sample importation transaction with computation of VAT.
 
-
 
9. Distinguish “automatically zero-rated sales” from “effectively zero-rated sales”.
 
- Automatically sales by VAT-registered persons which are subject to 0% rate, meaning the
tax burden is not passed on to the purchaser. A zero-rated sale by a VAT-registered person,
which is a taxable transaction for VAT purposes, shall not result in any output tax. While
effective zero-rated sales is refers to the local sale of services by a VAT -registered person
to a person or entity who was granted indirect tax exemption under special laws or
international agreement.
 
10.  Enumerate the zero-rated sales
 
·  Certain foods/Food items
·  Sanitary products
·  Animal feeds
·  Beverages
·  Exported goods
·  Donated goods sold by charity shops
·  Equipment for disabled
·  Prescription medications
·  Water
·  Sewage services
·  Books
·  Printed publication
·  Children’s clothing
 
11. Enumerate the zero-rated services.
 
 
·  Provision of internet access to a certain websites
·  Exporting sales
·  Sales to any person/entity whose exemption under special laws or international
agreements
·  Services rendered to persons or entities who have direct and indirect tax
exemption granted
 
12.  What are the sources of input tax?
 
 ·  Transitional input tax
·  Presumptive input tax
·  Input taxes on domestic purchases or importations (VAT actually paid)
 
13. What is the transitional input tax credit?
 
- A person who becomes liable to value-added tax or any person who elects to be a
VAT-registered person shall, subject to the filing of an inventory according to rules and
regulations prescribed by the Secretary of Finance, upon recommendation of the
Commissioner, be allowed input tax on his beginning inventory of goods, materials and
supplies equivalent to eight percent (8%) of the value of such inventory or the actual
value-added tax paid on such goods, materials and supplies, whichever is higher, which
shall be creditable against the output tax.
 
14. What is presumptive input tax credit?
 
- Persons or firms engaged in the processing of sardines, mackerel and milk, and in
manufacturing refined sugar and cooking oil, shall be allowed a presumptive input tax,
creditable against the output tax, equivalent to one and one-half percent (1 1/2%) of the
gross value in money of their purchases of primary agricultural products which are used
as inputs to their production.
 
15. How are input taxes on depreciable goods computed?

16. How is input tax on mixed transactions (VATable/VAT-Exempt/Zero-Rated) allocated?

 For a taxpayer with mixed transactions, there are two types of input taxes that
may be used as credit against output taxes—(a) those that are directly attributed
to VATable transactions (including transactions which are zero-rated) and those
that are allocated for the reason that the input tax cannot be directly 

17.  What is the rule on withholding of final VAT on sales to government?

 Under the final withholding tax system, the 5% final VAT withheld is already considered
full and final payment due from the seller. This means that the seller, in substance, will
only be liable for the remaining 7% VAT which also pertains to the standard input VAT
as computed above.

18. Discuss the requisites and procedure on the refund or tax credit of excess input tax.

 Requisites and procedure on the refund or tax credit of excess input tax: 

1. VAT-registered whose sales are zero-rated or effectively zero-rated with excess input
taxes (VCAD)
 2. Large Taxpayers for claims by Zero Rated other than direct exporters (e.g. renewable
energy developers pursuant to Section 108(B)(7) of tax code and those with indirect
exports as effectively VAT zero-rated sales) pursuant to Section 112 (A) of the tax code
(LTS)
3. For claims whose VAT registration has been cancelled pursuant to Section 112(B) of
Tax Code. (LTS)

B. PERCENTAGE TAX 

1. What is “Other Percentage Taxes (OPT)”?

 Other Percentage Tax or OPT is a business tax imposed on INDIVIDUALS or

BUSINESSES that sell or lease goods or services with an annual revenue that doesn't
exceed P3 million and is NOT VAT registered.

2. What are the transactions covered by OPT? 

 Consumption levied on the sale, barter, exchange or lease of goods or properties and
services in the Philippines and on importation of goods into the Philippines. It is an
indirect tax, which may be shifted or passed on to the buyer, transferee or lessee of
goods, properties or services

3. Who are exempt from payment of OPT? 

 A compensation income earner, self-employed and professional taxpayer whose taxable

annual income is PHP250, 000 or less
 Persons, who are not VAT-registered, who sell goods, properties or services, whose
annual gross sales and/or receipts do not exceed three million pesos (Php3,000,000.00)
and are exempt from value-added tax (VAT) under Section 109 (BB) of the National
Internal Revenue Code, as amended by Republic Act (RA) No. 10963.

C. EXCISE TAXES 

1. What is an Excise Tax? 

 An excise tax is a legislated tax on specific goods or services at the time they are
purchased. Goods subject to excise taxes could be fuel, tobacco, and alcohol, among
others.
2. What is the nature of excise tax? 

 Excise Tax is a tax on the production, sale or consumption of a commodity in a country.

3. What are the kinds of excise taxes? 

 Specific Tax – refers to the excise tax imposed which is based on weight or volume
capacity or any other physical unit of measurement
 Ad Valorem Tax – refers to the excise tax which is based on selling price or other
specified value of the g