TBLTAX Chapter 4

Input and Output VAT

Regular Output VAT

Tax Transactions
1. Sale of goods
2. Sale of services
3. gross receipts
4. Transactions deemed
sales
Tax Basis
gross selling price, unless unreasonably lower
than fair market value
gross receipts
gross selling price as defined by BIR
fair market value of the property deemed sold

Gross Selling Price

- total amount of money or its equivalent which the purchaser pays or is
obligated to the seller in consideration of the sale, barter or exchange of
goods or properties. The excise tax, if any, on such goods or properties shall
form part of the gross selling price. VAT however, shall not be considered as
part of the gross selling price.

Allowable Deduction From The Gross Selling Price

1. Discounts determined and granted at the time of sale, which are expressly
indicated in the invoice, the amount thereof forming part of the gross sales and
are duly recorded in the books of accounts.

2. Sales returns and allowance for which a proper credit or refund was made during
the month or quarter to the buyer on taxable sales.
Example:
VAT Excluded
Cash sales, P400,000 Installment sales (P30,000 collected),
P100,000
Sales on account, P600,000 Sales returns and allowances, P20,000
Quota discounts, P20,000 Purchase of goods VAT included, P72,000
Compute for the gross selling price:
VAT Excluded VAT Included
Cash Sales 400,000.00 357,142.86
Sales on Account 600,000.00 535,714.29
Installments Sales 100,000.00 89,285.71
Total 1,100,000.00 982,142.86
Less: Sales Return and 20,000.00 17,857.14
Allowances
Gross Selling Price 1,080,000 964,285.71
 *If the selling price is unreasonably lower, the VAT shall be based on the fair
value of the goods sold. The gross selling price is deemed unreasonably lower when
it is lower by more than 30% of the actual market value of the goods sold.

Timing of Output VAT: reported in the month of sale (cash sale or sales on
account)
sale of goods: accrual basis of accounting

Gross Receipts
- refer to the total amount of money or its equivalent representing the contract
price, compensation, service fee, rental or royalty, including the amount charged
for materials supplied with the services and deposits applied as payments for
services rendered and advanced payments actually or constructively received
during the taxable period for the services performed for another person,
excluding VAT.

SALE OF SERVICES
Example:
Cash collection for services done, P400,000 VAT
Cash collection for services not yet started (advances), VAT
P100,000
Receivables on services rendered, P600,000 not subject to VAT
Purchases of goods and services, VAT included, P448,000 Input Tax
Compute for the gross receipts:

Cash collection for services done 400,000.00

Cash collection for services not yet started 100,000.00
Gross receipts 500,000.00

Timing of output VAT: reported in the month of collection

sale of services: cash basis of accounting

SALE OF VATABLE PROPERTIES

- Gross selling price means consideration received or fair market value of the
property sold, whichever is higher
- For sale of real property, fair market value is the higher amount between the
zonal value of BIR and market value of the assessor (City or Provincial Assessor)
- If the VAT is not separately shown in the receipts, the amount stated in the
receipts is deemed to be VAT inclusive (sale of goods or services)
- If the fair market value is higher than the selling price, the sale is deemed to be
VAT exclusive (sale of properties)
Example:
Appraisal value, P4,500,000 Assessor's fair market value, P2,500,000
Zonal value of BIR, P4,000,000 Selling price, P3,800,000
Compute for the Output VAT

FMV = assessor's market value or zonal value of bir, whichever is higher.

FMV - 4,000,000
Selling Price 4,500,000
Gross Selling Price 4,000,000.00 4,017,857.14
Multiply: Tax Rate 12% 12%
Output VAT 480,000.00 482,142.86

Note: it must be noted that the term "selling price" or consideration on the sale of the
property is legally presumed VAT inclusive but this is not the case on the sale of
goods.
Timing of Output VAT reporting: reported in the month of sale or by installment
method

Installment reporting of output VAT on real properties

- The output VAT on the sale of real properties may be reported in installments if
the initial payment from such sale does not exceed 25% of the selling price
- If the initial payments exceeds 25% of the selling price, the Output VAT must be
recognized in the month of sale.
- Sale of real property held as ordinary asset is subject to VAT.
TRANSACTIONS DEEMED SALE
- Not sale of goods but subject to VAT
A. Transfer, use, or consumption not in the course of business of goods or
properties originally intended for sale or use in the course of trade or business.
Example:
A VAT-registered grocery operator withdrew the following for personal use:
Fruits and vegetables with fair value of P10,000 and book value of P16,000
Processed goods with fair value of P18,000 and book value of P15,000
Compute for the Output Tax:

Output VAT (18,000x12%) = 21,600.00

Note: fruits and vegetables are VAT exempt. For transactions deemed sale, the
tax base is the fair market value.

B. Distribution or transfer to:

a. Shareholders or investors share in the profits of VAT-registered persons
b. Creditors in payment of obligations

C. Consignment of goods if actual sale is not made within 60 days following the date
such goods were consigned.
Example:
Sales - own inventory, P500,000
Sales - reported by the consignees, P150,000
The billed prices of outstanding consignments still held by consignees as of Apr.
30, 2020 :
Feb. 2020,P50,000
Mar. 2020, P80,000
Apr. 2020, P120,000
Compute for the output VAT for the month of April 2020:

Sales 500,000.00
Sales - reported by the consignees 150,000.00
Transaction deemed sale (Feb. Consignment) 50,000.00 unsold by the
Total 700,000.00 consignee for more
than 60 days
Multiply: Tax Rate 12%
Output VAT 84,000.00

D. 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
cessation, whether or not the business is continued by the new owner or
successor.
 Example:
Mr. AA, a VAT-registered taxpayer, ceased business operation in May 2020. His
business properties upon termination of business operation include:
Cash, P50,000 Inventories, P200,000
Accounts Receivable, P120,000 Property and Equipment, P800,000
Investments, P180,000
Compute for the Output VAT

Inventories 200,000.00
Property and Equipment 800,000.00
Total 1,000,000.00
Multiply: Tax Rate 12%
Output VAT 120,000.00

E. Cessation of status as a VAT-registered person.

Zero-Rated Sales
- ZERO rated sales are usually for foreign consumptions and sales in the
Philippines with an export sale treatment by special laws and international
agreements to which the Philippine government is a signatory.

Benefit of zero-rating
- Exempt transactions and zero-rated transactions will yield no output VAT. The
difference is on the treatment of input VAT. In exempt transactions, whatever
input VAT the seller pays for the purchases of goods or services from a VAT
registered supplier is not refundable or creditable. In zero-rated transactions,
whatever input VAT the seller pays for the purchases of goods or services
from a VAT registered supplier is refundable or creditable

Example:
During the month, AA Corporation purchased goods invoiced at P350,000 excluding
P42,000 input tax. It exported the goods for $10,000 which is equivalent to P500,000
and incurred P10,000 in expenses.
Assuming that AA Corporation is a VAT registered taxpayer, how much is the VAT
payable?

Output VAT -
Less: Input VAT 42,000,00
VAT Payable (overpayment) (42,000.00)

Note: The P42,000 Input VAT can be claimed as tax refund or deducted from other
internal revenue taxes provided the application for tax refund or tax credit shall be
made within two
years from the close of the taxable quarter in which the zero rated transaction has
been consummated.
Example:
During the month, AA Corporation purchased goods invoiced at P350,000 excluding
P42,000 input tax. It exported the goods for $10,000 which is equivalent to P500,000
and incurred P10,000 in expenses.
Assuming that AA Corporation is a non-VAT registered taxpayer, how much is the
VAT payable?

Exempt from of VAT

Output VAT -
Less: Input VAT -
VAT Payable (overpayment) -

Note: the entire cost of purchase of goods equivalent to P392,000

(P350,000+42,000) shall be deducted from income tax.

ZERO RATED SALE OF GOODS

A. Export Sales
B. Effectively zero-rated sales

A. EXPORT SALES
Eventually, the term export sales will only include:
1. Direct export
2. Sale to economic zones and tourism enterprises zones.
3. Sale of goods or properties, supplies, equipment and fuel to persons engaged in
international shipping or international air transport operations.

1. Direct Export
- Direct export is the sale and actual shipment of goods from the Philippines to
a foreign country, irrespective of any shipping arrangement that influences or
determines the transfer of ownership of the goods so exported.

Requisites:
1. Paid for in acceptable foreign currency or its equivalent in goods or services
2. Accounted for in accordance with the rules and regulations of the Bangko Sentral
ng Pilipinas

Example:
Customer/Buyer Place Payment
Delivered
Resident Alien Philippines $15,000 12% VAT
Visiting Tourist Philippines P400,000 12% VAT
A Filipino employee in Japan JAPAN $20,000 0% VAT Direct Export
A Business in Malaysia Malaysia $10,000 0% VAT Direct Export
Conversion rate: P50:1$
How much is the total zero rated transactions?
 A Filipino employee in Japan 1,000,000.00 (20,000 x 50)
Japan
A Business in Malaysia Malaysia 500,000.00 (10,000 x 50)
Total zero-rated 1,500,000.00
transactions

Assuming that the seller in the foregoing example is a non-VAT registered, how
much is the zero rated transactions?

Answer: None. Because the taxpayer is not subject to VAT.

2. SALE TO ECONOMIC ZONES OR TOURISM ZONES.

- Subject to 0% VAT because it is considered technical exportation
Examples of Philippine Economic Zones:
1. Philippine Economic Zone Authority
2. Cagayan Special Economic Zone
3. Zamboanga Special Economic Zone
4. Clark Special Economic Zone
5. Clark Freeport Zone
6. Poro Point Special Economic and Freeport Zone
7. John Hay Special Economic Zone
8. Aurora Special Economic Zone

Note: The provision of the TRAIN Law on sale to ecozones subjecting it to 0% VAT is
vetoed by the president but the TRAIN Law did not repeal RA 7916, The Special
Economic Zone Act. Thus, subjecting the sales to ecozones to 0% VAT.

3. SALE OF GOODS, SUPPLIES, EQUIPMENT AND FUEL TO PERSON

ENGAGED IN INTERNATIONAL SHIPPING OR INTERNATIONAL AIR
TRANSPORT OPERATIONS.
Example:
Domestic operation, P400,000 12% VAT
International operation, P500,000
How much is the amount to be subjected to 0% VAT?
International operation 500,000.00

B. EFFECTIVELY ZERO-RATED SALES

Sales to the following entities are granted 0% under special laws:
1. Asian Development Bank
2. International Rice Research Institute
3. United Nation and its various organizations, such as:
A. World Health Organization
B. UNICEF
4. United States Agency for International Development (USAID) and its personnel
and contractors
5. Embassies, qualified employees and dependents - subject to the reciprocity rule
6. Philippine National Red Cross
7. Philippine Amusement and Gaming Corporation and its liscensees or contractors

Requirement for effective zero-rating

- There must be application for zero rating with the appropriate BIR office.
Without this approval from the BIR, the sale shall be exempted from VAT. The
validity of such zero rating shall commence on the day the letter is received by
BIR and valid until Dec. 31 of the year. It is renewable every year.

Where to file application for zero rating?

- Taxpayers shall file their application with the Audit Information, Tax Exemption
and Incentives Division (AITEID) under the Assessment Service.

Previously Zero-Rated Sales

1. Foreign currency denominated sales - now subject to 12% VAT
2. Sales under the internal export program - now subject to 12% VAT
3. Sales to Boy Scouts of the Philippines - now subject to 12% VAT
4. Sale of gold to BSP - now exempt from VAT

Zero-Rated Sales Of Services

1. Sale of services to non-residents
2. Effectively zero-rated sales of services
3. Services rendered to persons engaged in international shipping or international air
transport operations including leases of properties thereof
4. Transport of passengers and cargoes by DOMESTIC air and sea carriers from the
Philippines to a foreign country
5. Sale of power or fuel generated from RENEWABLE sources or energy
6. Services rendered to ecozones or tourism enterprises zones.

Example:
AA Electric, a generation company has the following receipts during the month:
Sale of electricity generated from hydro plant, P20,000,000 0%VAT
Sale of electricity generated from solar plant, P30,000,000 0%VAT
Sale of electricity generated from coal-powered plant, P40,000,000 12%VAT
Sale of electricity generated from natural gas power plant, P10,000,000 12% VAT
Compute for the sale of electricity subject to 0% VAT

Sale of electricity generated from hydro plant, P20,000,000 20,000,000.00

Sale of electricity generated from solar plant, P30,000,000 30,000,000.00
Total zero-rated sale 50,000,000.00

Enhance VAT Refund System

- The Department of Finance shall establish a VAT refund system center in the
BIR and
in the BOC that will handle the processing and granting of the cash refunds of
creditable input VAT within 90 days.
- 5% of the total VAT collections of the BOC and the BIR from immediately
preceeding year shall be appropriated for the payment of tax refund.
Zero Rated Sales To Be Subjected To 12% Vat Upon Establishment Of An
Enhanced Vat Refund System
The following shall be subject to 0% VAT pending the establishment of Enhanced
VAT System:
1. Sale of raw materials or packaging materials to a non-resident buyer for delivery
to a resident export-oriented enterprise to be used in manufacturing, processing,
packing or repacking, in the Philippines of the said buyer's goods and paid for in
acceptable foreign currency and accounted for in accordance with the rules and
regulations of the BSP.

2. Sale of raw materials or packaging materials to an export-oriented enterprise

whose export sales exceeds 70% of total annual productions.

3. Those considered export sales under EO 226 (The Omnibus Investment Code of
1987) and other special laws.
A. The Philippine F.O.B. value of export products exported directly by an
export producer.
B. The net selling price of export products sold by a registered export
producer to another export producer
C. The net selling price of export products sold by a registered export
producer to an export trader that subsequently exports the same.
D. Even without actual exportation, the following shall be considered
constructively exported:
1. Sales to bonded manufacturing warehouses of export-oriented
enterprises
2. Sales to export processing zones in pursuant to RA 7916, 7903,
7922 and other similar export processing zones.
3. Sales to enterprises duly registered and accredited with the Subic
Bay Metropolitan Authority (RA 7227)
4. Sales to registered export traders operating bonded manufacturing
warehouses supplying raw materials in the manufacture of export
products.
5. Sales to diplomatic missions and other agencies and or
instrumentalities granted tax immunities, or locally manufactured,
assembled and repacked products whether or not paid for in foreign
currencies.
6. Sale of goods, properties or services to a BOI-registered
manufacturer or producer

INPUT VAT
What is input VAT?
Refers to VAT due or paid by a VAT-registered person on importation or local
purchases of goods, properties, or services, including lease or use of properties from
a VAT-registered seller in the course of his trade or business.
Determination of Input VAT
The VAT on purchase is usually reflected as a separate item in the VAT invoice or
VAT official receipt issued by the VAT-registered supplier. If the VAT is not billed
separately, the selling price is deemed to be VAT inclusive.

Requisites of a creditable VAT input

1. The input VAT must have been paid or incurred in the course of trade or business.
2. The input Vat is evidenced by a VAT invoice or official receipt.
3. The VAT invoice or receipt must be issued by a VAT-registered person.
4. Input VAT is incurred in relation to vatable sales and not from exempt sales.

Example:
Mr. AA had a P230,000 output VAT in the month. The following purchases were
made during the month:
*Goods from non-VAT suppliers, not claimable for (purchased from non-
P300,000 input tax purposes VAT suppliers)

*Goods from VAT suppliers with claimable for input tax

VAT invoices, P224,000 purposes

*Importation of car for personal not claimable for (car is used for
use, VAT inclusive, P1,120,000 input tax purposes personal purposes)

*Importation of fruits for sale, VAT exempt - no (importation of

P300,000 input tax can be agricultural food
claimed products is VAT
exempt)

*Importation of merchandise for claimable for input tax

sale, VAT inclusive, P896,000 purposes

*Services from VAT suppliers, not claimable for (receipts are not
evidenced by receipts not input tax purposes registered with BIR)
registered with BIR, P120,000.
What is the total amount of claimable input tax?

Goods from VAT suppliers with VAT invoices 24,000.00

(224,000/1.12)x0.12
Importation of merchandise for sale, VAT inclusive 96,000.00
(896,000/1.12)x0.12
Input tax 120,000.00

What is the VAT Payable?

Output Tax 230,000.00
Less: Input Tax 120,000.00
VAT Payable 110,000.00
Types Of Input Vat
1. Transitional input VAT
2. Regular input VAT
3. Amortization of deferred Input VAT
4. Presumptive input VAT
5. Standard Input VAT
6. Input Tax Carry-over

Example:
Mr. AA becomes liable to VAT after exceeding the VAT threshold of P3,000,000 in
Jan. 2020. As of Dec. 31, 2019, the following data are made available:
VAT-exempt goods, P20,000 (not includible in the computation of transitional input
VAT - VAT exempt goods)
Vatable goods:
from non-VAT sellers, P60,000 includible VATable Goods
from VAT sellers, P11,200 includible VATable Goods
Equipment from VAT seller, P1,120,000 (not includible in the computation of
transitional input VAT - only inventory of goods, materials and supplies are to be
included.)
Compute for the transitional input tax

from non-VAT sellers 60,000.00

from VAT sellers 10,000.00
(11,200/1.12)
Total 70,000.00
Multiply: Rate 2%
2% of the beginning inventory 1,400

Actual VAT (11,200/1.12)x1.12 1,200

2% of the beginning inventory is higher than the actual VAT paid thereon.
Transitional input VAT therefore, is P1,400.

Timing of Credit of transitional input VAT: month of registration as a VAT taxpayer

Requisites for claim of transitional input VAT

1. The taxpayer must submit an inventory list of goods
2. The taxpayer must prepare an entry recognizing the transitional input VAT credit in
his accounting books.

Regular VAT
Sources of Regular Input VAT Timing of Credit
1. Purchase of goods or properties Month of purchase
2. Purchase of services Month of purchase
3. Importation of goods Month VAT is paid
4. Purchase of depreciable capital asset or properties
 General Treatment Month of Purchase
 when the monthly amortized over life of the asset or
 aggregate acquisition cost 60 months, whichever is shorter
exceeds P1,000,000
5. Purchase of non-depreciable Not creditable
vehicles and on maintenance
incurred thereon

INPUT VAT on purchase of capital goods or properties

If the monthly aggregate acquisition cost of depreciable capital goods does not
exceed P1,000,000 - input VAT is claimable in the month of purchase
If the monthly aggregate acquisition cost of depreciable capital goods exceeds
P1,000,000 -input VAT is spread over the useful life of the asset or 60 month
whichever is shorter.

Example:
AA Enterprises, a VAT registered business purchased the following capital goods for
March 2020:
Useful Life Purchase Price Input Tax
(VAT Exclusive)
Equipment 4 yrs. (48 mo.) 600,000.00 72,000.00
Truck 10 yrs. (120 mo) 700,000.00 84,000.00
Aggregate purchase of capital 1,300,000.00
goods
Compute for the input tax in March 2020:

Input tax claimable April May

in March
Equipment (72,000/48) 1,500.00 1,500.00 1,500.00
Truck (84,000/60) 1,400.00 1,400.00 1,400.00
Total input tax claimable March 2,900.00 2,900.00 2,900.00
2020 (purchase of capital
goods

Example:
AA Enterprises, a VAT registered business purchased the following capital goods for
March 2020:
Useful Life Purchase Price Input Tax
(VAT Exclusive)
Equipment 4 yrs. (48 mo.) 600,000.00 72,000.00
Truck 10 yrs. (120 mo) 250,000.00 30,000.00
Aggregate purchase of capital 850,000.00 102,000.00
goods
Compute for the input tax in March 2020:

Equipment 72,000.00
Computer 30,000.00
Total input tax claimable March 2020 102,000.00
Sale or transfer of depreciable capital goods within 5 years prior to the exhaustion of
the amortizable input tax thereon, the entire unamortized input tax (deferred input
tax) on the capital goods sold/transferred can be claimed as input tax credit during
the calendar month or quarter when the sale or transfer was made.

Scheduled phase-out of the amortization treatment

Under the TRAIn law, the amortization treatment of deferred input Vat will be stopped
effective Jan. 1, 2022. Previously recognized derred input vAT will continue to be
amortized even after that date but the deferred treatment will be stopped. Input VAT
on capital goods will be claimed outright in the month of purchase effective Jan. 1,
2022.

Presumptive Input Tax

Persons or firms engaged in the processing of SARDINES, MACKEREL AND MILK
and in the manufacturing of REFINED SUGAR, COOKING OIL AND PACKED
NOODLE BASED INSTANT MEALS, shall be allowed a presumptive input tax
equivalent to 4% of the gross value in money of their purchases of PRIMARY
AGRICULTURAL PRODUCTS which are used in their production

Example:
AA Corporation is a VAT registered taxpayer and engaged in manufacturing of
sardines. During the month, it purchased the following ingredients for the processing
of the sardines:
Cost Input VAT
Fresh sardines 800,000.00 - VAT Exempt
Hot chili 50,000.00 - VAT Exempt
Tomatoes 400,000.00 - VAT Exempt
Ordinary salt 20,000.00 - VAT Exempt
Tin cans 120,000.00 14,400.00 12% VAT
Labels 60,000.00 7,200.00 12% VAT
Compute for the presumptive input tax

Hot chili 50,000.00

Tomatoes 400,000.00
Ordinary salt 20,000.00
Total 470,000.00
Multiply: Rate 4%
presumptive input tax 18,800.00

Note: under Revenue Regulations #16-2005, ordinary salt is an agricutural product.

Fresh sardines are not agricultural products.

STANDARD INPUT VAT - no longer exists starting Jan. 1, 2021 (starting Jan. 1,
2021 - 5% government money payment shall be treated as creditable VAT
Sale of goods or services to the government or any of its political subdivisions,
instrumentalities or agencies, including government-owned and controlled
corporations is subject to 5% final withholding tax VAT based on the gross payments.
The 5% withholding on VAT is deemed final and only the 7% of sales as input VAT.
This is standard input VAT.

Example:
AA Corporation sold goods to the City of Bacolod worth P100,000 invoiced at
P112,000 VAT inclusive. AA Corporation purchased the same for P90,000 exclusive
of P10,800 VAT.
What is VAT Payable?

Output VAT (112,000/1.12)X.12 12,000.00 12%

Less: 7% Standard input VAT ((112,000/1.12)x7%) 7,000.00 7%
Excess output tax over standard input tax (equal to 5,000.00 5%
5% Final VAT
Less: 5% final VAT 5,000.00
VAT Payable 0

What happens to the difference of the actual input VAT on sale to government and
the 7% standard input tax?
The difference between 10,800 and 7,000 is closed to expense account.

What is the obligation of government agencies, GOCC or any of its political

subdivision if the supplier is a non-VAT registered taxpayer?
Deduct 3% (now 1%)creditable percentage tax

Beginning Jan. 1, 2021, the final VAT system will be abolished and will be replaced
by a creditable VAT system.

Input tax Carry Over

Rules on input tax carry over
1. The input VAT carry over of the prior quarter is deductible in the first month of the
current quarter.
2. The input VAT carry-over in the first month of the quarter is deductible in the
second month of the quarter
3. The input VAT carry over in the second month of the quarter is not deductible to
the 3rd month of the quarter.
4. The input Vat carry-over of the prior quarter is deductible in the third month
quarterly balance of the present quarter.

VAT Returns
1. Form 2550M used in the first 2 months of 20th day following the close
the quarter of the month
2. Form 2550Q used in the 3rd month of the 25th day following the close
quarter of the quarter
Additional Information:
2 sets of Form 2307
1. Creditable against VAT – shall be filed with _________
2. Creditable against Income Tax

2 Types of VAT System

Sales – 1,000,000
Purchases – 700,000
Government Money Payments (VAT) – 50,000
1. Creditable VAT System
Output Tax (1,000,000 X 12%) 120,000.00
Less: Input Tax (700,000 x 12%) 84,000.00
Excess Output Tax over Input Tax 36,000.00
Less: Creditable VAT 50,000.00
VAT Payable (14,000.00)
2. Final VAT System – has been discontinued starting January 1, 2021
Output Tax (1,000,000 X 12%) 120,000.00
Less: Input Tax (1,000,000 x 7%) 70,000.00
Excess Output Tax over Input Tax 50,000.00
Less: Final VAT 50,000.00
VAT Payable 0

*the difference of the input tax on the creditable withholding tax and final tax will go
the expense account

If the credit VAT System is higher than the final VAT

Expense Account 14,000
Input Tax 14,000

If the final VAT System is higher than the credit VAT

Input VAT 14,000
Expense Account 14,000

3 Types of Witholding Tax

1. Government Money Payments
- Withholding tax for purchases of the government
2. Final Witholding Tax
3. Creditable Witholding Tax

Initial Payment
- It is the amount of money received or to be received in the year of sale

Sources of Input Tax

1. Purchase of goods/services
2. Purchase of capital goods
3. VAT/Input Tax Carry Over
4. VAT on importation of goods
 Note: the sources of input tax should come from a VAT registered person. This
can be check if the receipt has a tin and VAT.

2 Primary Receipts
1. Sales/Cash Invoice – purchase of goods
2. Official Receipts – purchase of services

The capital goods are depreciable assets before January 1, 2021. The claim of input
tax on the capital goods has specific requirements:
1. If the aggregate gross selling price purchased in a month not exceed
1,000,000 – input tax can be claimed on the month of purchase
2. If the aggregate purchase price of capital goods exceeds 1,000,000 in a
month – input tax is spread over the useful life of the asset or five years,
whichever is shorter
Note: However, starting January 1, 2021, input tax is claimed on the month of
purchase