VAT-Exempt 0% VAT
Real Property
Not primarily held ICT/B Low-cost or socialized housing Residential lot <= 1,919,500
House and/or other residential dwellings <= 3,199,200
Lease (12,800/unit/year or total 1,919,500/year)
Transmission to a trustee E: if transmission is deemed sale
Transfer to corporation in exchange of SoS Advance payments/Security Deposits in lease
E: if applied to the rent
As regards ecozones and PEZA-registered entities
Made by VAT-exempt supplier from customs territory to any registered enterprise inside ecozone
Intra-ecozone enterprise sale of service, if PEZA registered seller is subject to 5% special tax regime
Intra-ecozone sales of goods
Actual Export Sales (3) Deemed Export Sales
Internal or constructive export sales
Raw/Packaging materials to non-resident buyer (5) Raw/Packaging materials to export-oriented (3) Phil. Port FOB value of export products (2)33 Net selling price of export products (4)34
sales to bonded manufacturing warehouses (2)35 sales to export processing zones36
sales to enterprises duly accredited by Subic Bay Metropolitan Authority (2)
sales to registered export traders (3) sales to diplomatic missions etc. (2)
sale by VAT-supplier to manufacturer/producer whose products are 100% exported (3)
Sale of gold to BSP
Sale of goods/supplies/equipment/fuel to persons engaged in int’l shipping/air transport (4)
Docking/Undocking services to foreign vessels Foreign currency denominated goods
To a NRC/NRA of goods (5)
To a NRC/NRA of goods locally manufactured for household and personal use (2)
E: automobiles and non-essential goods Effectively-zero rated sales (3)
Made by VAT registered supplier from customs territory to any registered enterprise inside ecozone Intra-ecozone enterprise sale of service, if PEZA registered seller is subject to NIRC taxes
33 Under Omnibus Investment Code (EO226) 34 Ibid
35 RA7227 36 RA 7916
138
Taxable Activity/Property TR Tax Base Tax Payable
Actual SBE of Goods or Properties
12%
Gross Selling Price
VAT Payable
paid by
seller/transfer or
Goods/ Personal
Properties = amt. paid to the seller
Real Properties = consideration/FMV, higher IF sale is on instalment plan AND ZV/FMV > SP
(excluding VAT)
=
𝐴𝑐𝑡𝑢𝑎𝑙 𝑐𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑜𝑛 𝑜𝑓 𝑐𝑜𝑛𝑠𝑖𝑑𝑒𝑟𝑎𝑡𝑖𝑜𝑛
𝐴𝑔𝑟𝑒𝑒𝑑 𝐶𝑜𝑛𝑠𝑖𝑑𝑒𝑟𝑎𝑡𝑖𝑜𝑛 𝑥 𝑧𝑜𝑛𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑜𝑟 𝐹𝑀𝑉 (𝑒𝑥𝑒𝑐𝑢𝑡𝑖𝑜𝑛)
Deemed Sale Transactions Not ICB/T, but originally intended for sale/use ICB/T
12%
FMV (at the time of transaction)
E: if FMV is unreasonably lower (by more than 30% of AMV) = AMV or determined by CIR
Transfer to SH in share of profit or Cr in payment of debt
Consignment after 60d Retirement/Cessation of
business AC or current market price, lower
Sale of Services 12 % Gross receipts derived VAT Payable paid by
performer Importation of Goods
12%
Total Value used by BOC VAT paid by
importer PRIOR tp the release of goods in Customs custody In general =tariff & custom duties + custom duties + excise tax + charges
When custom duties are based on quantity or
volume = landed cost + excise tax
(1) Once registered as a VAT person, the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day of the month following registration.
(2) The cancellation for registration will be effective from the first day of the following month the cancellation was approved. What is the treatment for Withholding of VAT on Government Money Payments? (3) The government or any of its political
subdivisions, instrumentalities or agencies, including government-owned or controlled corporations (GOCCs) shall, before making payment on account of each purchase of goods and/or services taxed at twelve percent (12%) VAT pursuant to Sections 106 and 108 of the Tax Code, deduct and
withhold a Final VAT due at the rate of five percent (5%) of the gross payment.
The five percent (5%) final VAT withholding rate shall represent the net VAT payable of the seller. The remaining seven percent (7%) effectively accounts for the standard input VAT for sales of goods or services to government or any of its political subdivisions, instrumentalities or agencies including GOCCs in lieu of the actual input VAT directly attributable or ratably apportioned to such sales. Should actual input VAT attributable to sales to government exceeds seven percent (7%) of gross payments, the excess may form part of the sellers' expense or cost. On the other hand, if actual input VAT attributable to sale to government is less than seven percent (7%) of gross payment, the difference must be closed to expense or cost.
139 The government or any of its political subdivisions, instrumentalities or agencies including GOCCs, as well as private corporation, individuals, estates and trusts, whether large or non-large taxpayers, shall withhold twelve percent (12%) VAT with respect to the following payments:
Lease or use of properties or property rights owned by non-residents; and
Other services rendered in the Philippines by non-residents.
140
VAT AND NON-VAT REGISTRATION
Compliance activities after registration: 1. Registration of books of accounts (3) of the
business/occupation/calling including practice of profession, before using the same.
2. Registration of sales invoices and official receipts (If there are transactions not subject to VAT, registration of non-VAT invoices or non- VAT official receipts)
3. Annual Registration: Pay registration fee for every place of business that generates sales after updating the registration records. 4. Filing of the Monthly VAT Declaration and
Quarterly VAT Return to be submitted to RTO/LTDO
Person Liable for VAT
Did not register:
Still liable for VAT
No input credit Register to RDO for every separate and distinct establishment (cannot be cancelled w/in
3years; franchise of radios/tv broadcasting,
irrevocable) Optional Registration
Person (w/ TIN)
Before start of business and every year thereafter (on/before Jan 31)
APPROVE
DENY
Before start of business or within 10d before the beginning of taxable quarter
Certificate of Registration Registration Fee (500php) to
authorized bank agent, RDOfficer, Rev Collection Officer, authorized city/municipal treasurer EXEMPT from 500php 1. if aggregate gross sales/receipts ≤ 100,000; 2. cooperative;
3. individuals earning pure compensation income; 4. overseas workers
Register to RDO for every separate and distinct establishment DENY Certificate of Non-VAT Registration Fee (500php) to authorized bank agent, RDOfficer, Rev Collection Officer, authorized city/municipal treasurer EXEMPT from 500php if aggregate gross sales/receipts ≤ 100,000; cooperative; individuals earning pure compensation income; overseas workers
APPROVE
CANCELLATION/UPDATE OF VAT REGISTRATION (registration of a taxpayer of a franchise grantee of radio and/or tv broadcasting whose gross annual receipts≤ 10,000,000 = irrevocable)
Instances when a taxpayer may CANCEL his registration:
1. When TP’s gross sales/receipts for the following 12 months ≤ 1,919,500
2. When TP has ceased to carry on his T/B and does not expect to recommence within 12m 3. In case of a single proprietorship, a change of ownership
4. Dissolution of a partnership or corporation 5. Merger/consolidation wrt dissolved corporations
6. Person who registered prior to planned business commencement but failed to actually start business
UPDATE his registration:
1. When TP’s business has become exempt
2. When there is a change of the nature of business (from vatable to exempt)
3. When TP a tax-exempt individual who applied for optional registration and cancelled his registration after 3yrs.
4. When TP is a VAT-registered person whose gross sales/receipts for 3 consecutive years ≤ 1,919,500 Minor change in original registration
Filing of Short Period Return (for the remaining period that he was VAT-reg)
Notice of Change (f change of address) Cancellation/Update necessitating cancellation w/in 25d from cancellation w/in 15d from change
RE applications for VAT zero-rating: Taxpayers shall file their application directly with
the Audit Information, Tax Exemption and Incentives Division (AITEID) under the Assessment Service, or with the LTAID I and II, BIR National Office, as the case may be.
141
VAT
REFUND
OR
VAT
CREDIT
CERTIFICATE
VAT-registered
Taxpayer Presumptive Input Tax Transitional Input Tax Actual Input Tax not related to zero-rated sales
Input Tax wrt Zero-rated and Effectively zero-rated Sales
VAT- registered cancelling their registration (regardless of
the source of input tax)
Non-VAT Taxpayer VAT-registered Taxpayer DENIED NO INPUT TAX Tax Credit Certificate Direct Tax Credit GRANTED Apply against OUTPUT VAT Carry-over Tax Credit Application for refund or TCC to CIR + supporting docs If VAT-exempt changes his status to VAT- registered = transitional input tax
w/in 2 years after
close of the
taxable quarter
when sales are made
w/in 2 years after close of the taxable quarter when sales are made
Appeal to CTA Tax Refund w/in 120 days from submission w/in 120 days from submission w/in 30 days from receipt of denial INACTION w/in 30 days from expiration of 120-days DENIED GRANTED ISSUANCE VAT-exempt Transactions
Related INPUT VAT shall be treated as a cost of
sale or operating expense
Related INPUT VAT shall be treated as
cost of purchases
Related OUTPUT VAT shall be treated
as an operating expense
142
VI. Tax Remedies under
the NIRC
Remedies: method by which a cause of action can be enforced by law or equity. It is a procedure which may be availed of by a person as a means to obtain the relief desired
In tax, these remedies may be availed of if the taxpayer overpaid, or if the taxpayer paid the wrong king of tax, or did not pay.