Vhenieze Jadelynne T.

Abenda
3E1-BS Accountancy

What is VAT?
According to (Tabag, E., & Garcia, E. J., 2019) VAT or the Value Added Tax is a tax on the
value added by every seller to the purchase price or cost in the sale or lease of goods, property
or services in the ordinary course of trade or business as well as on importation of goods into
the Philippines, whether for personal or business use. It is a tax on consumption levied on the
sale, barter, exchange or lease of goods, or properties and services in the Philippines levied at
each stage of production and distribution process. (RR 4-2007) “Cross border doctrine” means
that no VAT shall be imposed to form part of the cost of goods destined for consumption
outside the territorial border of the Philippine Taxing Authority. As a rule, sale of goods or
services made in the normal course of trade or business are subject to vat “unless exempt”.
Nonetheless, if the sale is exempt from vat, it is may be subject to other percentage taxes
except those transactions exempt from business taxes such as those made for subsistence or
livelihood. (Tabag, E., & Garcia, E. J., 2022)
Kinds of VAT
● VAT on sale of goods or properties
● VAT on importation of goods
● VAT on sale of services and use of lease or properties

What are the Percentage Taxes? Define each.

According to (Tabag, E., & Garcia, E. J., 2022), percentage tax is a tax imposed on sale,
barter or exchange of goods, sale of services based upon gross sales, value in money of
receipts derived by the manufacturer, producer, or seller measured by certain percentage of the
gross selling price or receipts. The percentage taxes are provided in the Tax Code under 116 to
127, as amended.
Kinds of Percentage Taxes:
● Tax on person exempt from value-added tax (Sec. 116);
● Percentage tax on domestic carriers and keepers of garages (Sec. 117);
● Percentage tax on international carriers (Sec. 118);
● Tax on franchises (Sec. 119);
● Tax on overseas dispatch, message or conversation originating from Philippines (Sec.
120);
● Tax on banks and non-bank financial intermediaries (Sec. 121);
● Tax on other non-bank financial intermediaries (Sec. 122);
● Tax on life insurance premiums (Sec. 123);
● Tax on agents of foreign insurance companies (Sec. 124);
● Amusement taxes (Sec. 125);
● Percentage Tax on POGO’s under Sec. 125-A (new provision)
● Tax on winnings (Sec. 126); and
 ● Tax on sale, barter or exchange of shares of stock listed and traded through the local
stock exchange (Sec. 127).
What is Excise Tax?
An excise tax is a tax imposed on specific goods or services such as tobacco, fuel and
alcohol. Excise tax is also known as tax on the production, sale, or consumption of a commodity
in a country, including certain services. It is imposed on:
❖ Certain goods manufactured or produced in the Philippines for domestic sale or
consumption or for any other disposition;
❖ Certain goods imported; and
❖ Certain services performed in the Philippines
What are the Types of Excise Taxes?
❖ Specific Tax- It refers to the excise tax imposed which is based on weight or volume
capacity or any other physical unit of measurement.
❖ Ad Valorem Tax- It refers to the excise tax imposed which is based on selling price or
other specified value of the goods/ articles.
What is Documentary Stamp Tax (DST)?
Documentary Stamp Tax (DST) is an excise tax levied on documents, instruments, loan
agreements and papers evidencing the acceptance, assignment, sale or transfer of obligation,
rights, or property incident thereto. The amount of tax is either fixed or based on par or face
value of the document or instrument.

References:
Tabag, E., & Garcia, E. J. (2019). Transfer & Business Taxation with Special Topics

(2019th ed., p. 207) [Review of Transfer & Business Taxation with Special Topics]. EDT

Bookshop.

Tabag, E., & Garcia, E. J. (2022). Transfer & Business Taxation with Special Topics

(2022nd ed.) [Review of Transfer & Business Taxation with Special Topics]. EDT

Bookshop.