VAT

PAYABL
E
Christopher de Guzman, CPA, CAT
 Output Tax (Sales) P xxx
Formula for
Input Tax (Purchases) P xxx
VAT Payable
VAT Payable (Net) P xxx
Output
Tax
  12% (gross selling price, net of VAT +
excise tax, if any);
VAT on Sale  to be paid by the seller or transferor;
of Goods or  Tangible or intangible objects capable of
Properties pecuniary estimation.
 Except those included in 0% VAT and VAT
(Sec. 106A) exempt.
Inclusive: Value/1.12 x 12%
Exclusive: Value x 12%
  Real properties held for sale or held for lease in
the ordinary course of trade or business.
 Right or privilege to use the following:
a. patent, copyright, design or model, plan,
secret formula or process, goodwill,
Objects trademark, trade brand or other like
Includes: property or right;
b. industrial, commercial or scientific
equipment;
c. motion picture films, films, tapes and discs;
d. Radio, television, satellite transmission, and
cable television time.
 Gross Sales Pxxx
Less: Sales discount Pxxx
Sales Returns and Allo. xxx xxx
Net Sales Pxxx
Add: Excise Tax xxx
Gross Selling Tax Base Pxxx
Price Means 12% VAT xxx
Output Tax Pxxx

Output Tax - Value added tax due on the sale of taxable goods,
property and services by any person whether or not he has
taken the necessary steps to be registered.
 Sales discount, granted and indicated in the
invoice at the time of sale, the grant of
which does not depend upon the happening
of a future event which may be excluded
from the gross sales within the same quarter
Discounts and it was given.
Allowances
Sales returns and allowances, may be
deducted from the gross sales or receipts
for the quarter in which a refund is made or
a credit memorandum or refund is issued.
 On July 10, 2018, Chris Co., VAT-registered
person, sold on account goods for P 560,000. The
term was: 3/10, n/30. Payment was made on July
15, 2018. The total amount due is:
Application:
Sales 560,000/1.12 = 500,000 x 97% = 485,000
Discounts 500T x 12% = 60,000
Total 545,000
 Export Sales which includes:
 Sale of goods, supplies, equipment, and fuel to
Zero Rated person engaged in international shipping or air
VAT on Sale of transport operations: Provided, that the goods,
Goods or supplies, equipment, and fuel shall be used for
international shipping or air transport operations.
Properties
(TIES)  Sales to persons or entities whose exemption
under special laws or international agreements
(Treaties) to which the Philippines is signatory.

Note: Sec. 109U – importation only

Treaties: Sales to ADB and IRR
 Constructive export:
 Sale to bonded manufacturing warehouses of
export-oriented manufacturers;
Zero Rated  Sales to export processing zones;
(Art. 23 of EO  Sales to registered export traders operating
226) bonded trading warehouses supplying raw
materials used in the manufacture of export
products under guidelines to be set by the
Board in consultation with the BIR and BOC;
 Constructive export:
 Sales to foreign military bases, diplomatic
mission, and other agencies and/or
instrumentalities granted tax immunities, of
Zero Rated locally manufactured, assembled, or repacked
(Art. 23 of EO products whether paid for in foreign currency or
not: Provided, further, That export sales of
226) registered export traders may include
commission income: and Provided, finally, That
exportation of goods on consignment shall not be
deemed export sales until the export products
consigned are in fact sold by the consignee.
 Constructive export:
 Sales of locally manufactured or assembled goods
Zero Rated for household and personal use to Filipinos
(Art. 23 of EO abroad and other non-residents of the Philippines
as well as returning Overseas Filipino under the
226) Internal Export Program of the government and
paid for in convertible foreign currency inwardly
remitted through the Philippine banking system.
 Inventories –
 Used for owner’s personal consumption;
Transactions
 Consignment not sold after 60 days;
Deemed Sales
 Profit sharing;
(Sec. 106B)
 In payment of debt;
 Inventory on hand upon retirement from or
cessation of business.
  Personal properties – Gross Selling Price
 Real Properties – Gross Selling Price, Zonal Value,
VAT – AV, whichever is the highest
 Applicable only if the terms is cash or
Properties deferred payment;
(Cash vs.  If Installment, (collection/ gross selling price)
Installment) x GSP, ZV, FMV, whichever is the highest;
 It is deferred if the initial payment is more
than 25% of the GSP
 It is installment if the initial payment is at
least 25% of the GSP, or more.
  12% of gross receipts from sale or exchange of
services, including the use and the lease of
properties;

Vat on Sale of  Sale or exchange of services – performance of all

Services, and kinds of services … including the sale of electricity
Use or Lease of by generation companies, transmission by entity,
and distribution companies, including electric
Properties cooperatives… except those under Sec. 119
(Sec. 108) (Franchise tax) and non life insurance companies
(except crop insurances)…

 Gross receipts – includes the amount charged for

materials supplied with the services and deposits
and advanced payment…
 Cash received (actually or constructively) P xxx
Deposits/advanced payments for future projects xxx
Sale of Materials charged for services xxx
Services Gross receipts P xxx
x VAT rate 12%
Output Vat P xxx
  12% VAT based on gross income

Dealer in  DS – Buyer – CGT

Securities  DS – SM – STT – 6/10 of 1% of GSP
 Dealer in securities – VAT (12% based on
GI) and income tax
  Power or fuel generated through renewable
source of energy;
Zero Rated on
 International shipping or international air
Sales of transport operations;
Services, Use  Special laws;
or Lease of  Treaties;
Properties
 Export (transport) of passengers and cargo by
(PISTE) domestic air or sea vessels from the Philippines
to a foreign country;
  Services other than the provision below rendered
to a person engaged in business outside the
Philippines or to a nonresident person not engaged
in business who is outside the Philippines when the
services are performed, the consideration for
Zero Rated which is paid in acceptable foreign currency and
(0%) on accounted for in accordance with the rules and
regulations of the BSP.
Services
 processing, manufacturing, or repacking of
goods for other persons doing business outside
the Philippines which goods are subsequently
exported, where the services are paid in …
Tax Credit
(Input Tax)
  Creditable input tax (Sec. 110)
 Input tax on importation (Sec. 107)
Tax Credit  Input tax on purchases of goods
 Input tax on purchases of services
Comprise  Input tax on capital goods
 Excess of input tax over output tax
of –
 Transitional and Presumptive input tax (Sec.
111)

 Refunds or Tax credits of input tax (Sec. 112)

  All importations;

 Basis of VAT (12%)

 Total value used by the BOC in
Importation determining tariff and custom duties,
plus custom duties, excise taxes, if any,
(Sec. 107) and other charges
 Landed cost-plus excise taxes, if any.

 Tax exempt to non-tax exempt – liable to

VAT is the non-tax exempt;
  Less than 1M, VAT shall be deducted in full;

 More than 1M, VAT shall be amortized over the

life of the capital goods or 5 years, whichever is
Input tax on shorter.
Capital Goods
 This rule is applicable until December 31, 2021
ONLY; unutilized input VAT shall be allowed to
apply the same as scheduled until fully utilized.
  Directly attributable to VAT transactions
VAT – input tax can be credited
Registered and correspondingly.
Non-VAT
Registered at
 Not directly attributable – ratable portion
the Same Time
based on the sales net of VAT.
  Excess of input tax over output tax;

 Can be carried over to the succeeding month or

quarter. Provided, the amount of carried over
Deferred shall not exceed more than 70% of the output
VAT.
VAT
 Input tax on zero rated transactions may be
credited to other tax obligations or refunds.
 A. Transitional Input Tax Credits –
 From Non-VAT to VAT registered person
entitled to 2% transitional input tax on the
value of his beginning inventory or the
actual VAT paid on that inventory,
Transitional whichever is higher.
 Requires the filing of inventory to BIR.
and
Presumptive B. Presumptive Input Tax Credits –
 Engaged in processing of sardines,
Input Tax mackerel, milk, refined sugar, cooking oil
and packed noodles entitled to 4%
presumptive input tax based on value of
their purchases of primary agricultural
products as their inputs in production of
those.
  Applicable to zero rated sales;

 Tax credit certificate or refund shall apply

within 2 years after the close of the taxable
Tax quarter when the sales was made;

Refund  For those who cancelled VAT registration, he

may file his tax credit certificate within 2
years from the date of cancellation for the
payment of his other tax obligations. He may
refund when he has no other tax obligations.
  RR 13 - 2018:
 The date of cancellation is the date of issuance of
tax clearance by the BIR, after full settlement of
all tax liabilities relative to cessation of business
or change of status of the concerned taxpayer;
Tax
 The filing of the claim shall be made only after
Refund completion of the mandatory audit of all internal
revenue tax liabilities covering the immediately
preceding year and the short period return and
the issuance of the applicable tax clearance by
the appropriate BIR Office which has jurisdiction
over the case.
  Refund shall be given within 90 days from the
date of submission of documents;

 The refund must be paid in cash and the tax

credit certificate is no longer allowed;
Period for
Tax  The BIR should state in writing the legal and
factual basis for the denial of the refund. The
Refund denial is appealable in the Court of Tax Appeals
within 30 days from the receipt of the decision.

 Any official agent or employee of BIR who fails

to act on refund within 90 days shall be
punished under Sec. 269 of the Tax Code.
 A. Return and Payment of VAT –
 Monthly VAT (2550M)
 Quarterly VAT (2550Q)
 January 1, 2023 – only quarterly VAT
Filing of  Cancellation – within 25 days after the
VAT Return cancellation of registration.

(Sec. 114)
B. Where to File and Pay VAT –
 Authorized agent banks
 Revenue Collection Officer
 Authorized city or municipal treasurer
Final  Beginning January 1, 2021 – from final to
CREDITABLE withholding VAT;
Withholding
VAT
 Thanks!
Reference: NIRC of the
Philippines, as amended:
annotated, 5th edition, 2018,
Rodelio T. Dascil.