Business Taxation L.

Sale by agricultural coop

Chapter 8
Value Added Tax

Value Added Tax

• 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
M. Gross receipts from lending activities by credit
course of business as well as importation of or multi-purpose coop
goods into the Phil, whether for personal or
business use.

Vat Exempt Sales (Sec 109)

Part 1
N. Sale by non agri, non electric, non-credit coop
A. Sale or importation of agricultural and marine
o Share capital contribution of each
products in their original state for human
member does not exceed 15,000
consumption
o Importation by non-agri, non electric
B. Sale or Importation of
noncredit coop of machineries and
o Fertilizers
equipment – subject to vat
o Seeds, seedlings, and fingerlings, prawn,
livestock and poultry feeds
C. Importation of personal and household effects
D. Importation of professional instruments,
domestic animals – for their own use and not
for sale
E. Services subject to Percentage Tax
F. Services by:
a. Agricultural contract growers
b. Milling for others of:
▪ Palay into rice
▪ Corn into grits Part 3
▪ Sugar cane to raw sugar O. Export sales by persons who are not vat-
G. Medical, dental hospital, and veterinary registered
services except those rendered by P. Sale of Real property
professionals a. Sale of real property NOT primarily held
o Laboratory services are exempted for sale to customers or held for lease
o If hospital or clinic operates pharmacy – in the ordinary course of trade or
sale of drugs and meds subject to VAT business – kasi subj to CGT
o Hospital bills constitute medical services b. Sale of real property utilized for
– exempted from VAT socialized housing
c. Sale of House and Lot and other
Part 2 residential dwellings w/ selling price
H. Educational services by private educ institutions not more that P3,1999,200
I. Services rendered by indiv, pursuant to an
employer-employee relationship
J. Services rendered by RHQ established in the
phil by multinational corpo
K. Transactions exempt under international
agreements (ex. Red cross, senior citizens,
PWD)

1
Q. Lease of Residential Units
R. Sale, importation, and printing or publication of
books
o And any news paper, magazine, journal,
review or bulletin covered by UNESCO
not devoted for paid advertisements
o Books, newspapers, magazines, review
and bulletin – only covers HARD COPY
and PRINTED
o Does not apply to electronic format
Part 4
S. Transport of passengers by international
carriers doing business in the Phil.
T. Sale, importation, or lease of passenger or cargo
vessel and aircraft, including engine,
equipment and spare parts thereof for
domestic or international operations
U. Importation of fuel, goods, and supplies by
persons engaged in international shipping and
air operations – pero dapat shall be used for
international shipping or air transport
operations
V. Services of banks, non bank financial
intermediaries performing quasi banking
operations – yung subj sa Percentage Tax Sec
121 and 122
W. Sale or lease of g/s to SC and PWD – vat exempt
for SC & PWD
X. Transfer of property – tax free exchange
Y. Association dues, membership fees charges
collected on purely reimbursement basis by
HOA and Condo Corpo.
Z. Sale of Gold to Bangko Sentral ng Pilipinas –
Prior TRAIN law 0%
AA. Sale or importation of prescription drugs and
medicine
Jan 1, 2020 - prescribed for diabetes, high
cholesterol, hypertension
Jan 1 2021 (CREATE Law) – cancer, mental
illness, tuberculosis and kidney disease
BB. Sale or importation of the ff beg. Jam 1, 2021
to Dec 31, 2023
i. Capital equipment, spare parts
&raw materials for COVID
prevention
ii. All drugs, vaccines and medical
devices used to treat COVID
iii. Drugs for treatment of COVID
19 approved by FDA
CC. (Originally paragraph BB) Sale or lease of goods
or properties or performance of services -
gross annual receipts do not exceed 3M
2
COMPUTATION OF VAT PAYABLE
Sources of Output VAT
1. Actual Sale (Domestic Sale)
2. Transaction Deemed Sale
a. Transfer, use or consumptions NOT in the
ordinary course of business intended for
sale or use in the course of business
b. Distribution or Transfer to
▪ Shareholders as share in
profits
▪ Distribution or transfer to
creditors in payment of debt
or obligation
- outside Phil
c. Consignment of goods if actual sale not
made w/in 60 days
d. Retirement from or cessation of status of VAT
registered person w/ respect to all “goods at
hand”
Ff. are not considered transaction deemed sale
1. Change in control of a corpo by acquisition
of the controlling interest
2. Change in the trade or corporate name of
the taxpayer
3. Merger or consolidation of corporations
3. Zero Rated Sale (0% VAT)
VAT Registered = 0% rated
- The input VAT attributable to zero rated sale
may be
a. Refunded
b. Claimed as deduction (tax credit
against output vat on domestic
corpo)
c. Claimed as tax credit (TCC) against
ANY other internal revenue taxes
Non VAT registered = not allowed any tax credit
Subject to Zero-rated Sales
A. Goods or Properties
1. Sale and actual shipment of goods from Phil to
foreign country
2. Sale of goods engage in intl shipping or air
transport carriers
3. Sale to persons whose exemption from direct of
indirect tax under special laws ay subject sales
to 0% rated
4. Sale of raw mats, inventories, supplies to a
Registered Export Enterprise (REE) to be used
directly and exclusively in its registered project
B. Services
1. Services other than processing,
manufacturing or repacking rendered to a
person engaged in business conducted
2. Services to person- exemption from direct or
indirect tax – subject to 0%
3. Sale of service to REE
4. Services rendered to persons engaged in intl
shipping or air transport operations
5. Transport of passengers and cargo by
domestic air or sea vessels from Phil to
foreign country (transpo of passenger and
cargo exempt from VAT, but cargo still liable
to 3% CCT)
6. Sale of power of fuel generated thru
renewable sources of energy
3
Input VAT If Ad-valorem
Sources of Input VAT
1. Local purchase of goods or services
2. Acquisition of Capital Goods
3. Importation
4. Presumptive Input VAT
5. Transitional Input VAT
6. Creditable withholding VAT

1. Local purchase of goods or services If Specific tax

Goods for:
- Sale
- Conversion into finish product
- Use as supplies
- As materials supplied in sale of service
- Capital goods
• Real property for w/ VAT actually been paid
• Services from w/c VAT has been paid
o Goods = gross purchases
o Service = payment
4. Presumptive Input Tax – 4% on Sale of Goods
Processing of: (SaMaMi)
2. Acquisition of Capital Goods o Sardines
- More than 1M o Mackarel
o Spread evenly Manufacturing of: (ReCoPa)
o Shall not exceed 60 months (5 years) o Refined Sugar
o More than 12 months yung EUL o Coconut Oil
o Packed noodle based instant meals
- Not more than 1M
o Not allocated 5. Transitional Input Tax – 2%
o Treated as tax credit against output • Higher between:
tax in month of acquisition o Beginning inventory of goods - 2%
of value of such inventory
o Actual VAT paid –yung actual na
• TRAIN LAW – beg Jan 1, 2022 amortization
input VAT
shall NO LONGER be ALLOWED • Taxpayers who can avail transitional input
vat
3. Importation a. Taxpayers who becomes liable to vat
- Legitimate charges includes b. Taxpayers who elects to be VAT
o Customs duties registered
o Brokerage
o Wharfage 6. Creditable Withholding VAT
o Arrastre - Pag buyer mo govt, winiwithhold ng 5% VAT
o Stamps base sa selling price
o Processing fees
▪ Facilitation fee/ expenses Carry-over of Excess Input VAT
- Excess input VAT shall be carried over to
(bribe)
succeeding quarter/s
▪ From BOC to importer’s
- Any input VAT from zero rated sales may be
warehouse – di kasama sa refunded or applied for tax credit
VAT on importation pero
nileless din as input tax
pagkukunin VAT payable

4
Lease of Real Property
• Commercial – 12% VAT
• Residential – Exempt, OPT, or VAT

Sale of Real Property

• Output VAT is higher bet
o FMV (zonal value of BIR)
o FMV (assessed value of City Assessor)

VAT on Sale of Real Properties

• Cash Sale
- Output VAT reported on month of sale
• Deferred Sale
- Output VAT reported on month of sale
- Portion of SP: Initial payment EXCEED 25% of
the SP
• Installment Sale
- Subject to VAT on Installments + interest and
penalties
- Portion of SP: Initial Payment DO NOT
EXCEED 25% of SP

Mixed Business Transaction

• If not directly attributable

Filing of VAT Returns

- Monthly – 20th day after the end of each

month
- Quarterly - 25th day after the end of taxable
quarter
• Starting January 1, 2023 – filing and payment
quarterly nalang
o shall be done w/in 25 days after the
close of each taxable quarter

Place of Filing

• AAB located it the RD Office or Large

Taxpayers District Office (LTDO)