Recit Questions for August 1

William, imported a car from Japan for his personal use. Total landed cost is
Php 250,000 (about US $5,000) including custom duties of Php 50,000. How
much is the VAT payable?
Total Landed Cost Php 250,000 x Tax Rate 12% = 30,000 VAT Payable
Explanation: Importations of goods are subject to VAT even if the importers
intention is to use the goods for personal purposes.
The tax is based on 12% of the amount used by the BOC in determining custom
duties, plus excise taxes, if any.
The sale of fruits and veggies was invoiced at Php 46,667 by a vat registered
taxpayer. How much is the output vat?
The sale of fruits and veg is vat exempt under sec 109 of the nirc. However, if the
invoice price doesn't have the term "vat-exempt sale" written or printed
prominently on the invoice/receipt then the sale will be treated as regular vatable
sale. Computed as: (46,667/1.12)-46,667 = 5,000.04!!!
Ms Yna Tang, A Vat registered taxpayer made several purchases during the
month of August 2016:

Purchase of personal computer P 80,000

Purchase of machinery (for business use) . P 850,000
Purchase of Equipment (for business use) P 300,000
All purchases are VAT exclusive.

How Much is the creditable input tax for the month of August?
850,000x 12%= 102,000/60 =1700
300,000 x12%= 36,000/ 36 = 1,000
Explanation:
Notice that the purchase of computer is for personal use and as a rule, capital
goods not for use in the ordinary course of business are not subject to creditable
input tax. Thus, the aggregation rule only applies to the purchase of machinery and
equipment which exceeded the P1,000,000 threshold. (for further explanation see
page 276-277 of Banggawan book

Recit Questions for August 1

On January 2, 2013, Digong, a real estate dealer sold a real property to De Lima.
Consideration in the deed of sale..P10,000,000
FMV per assessment....9,100,000
Zonal value...9,500,000
Cost to seller.........7,000,000
Payments on the consideration
January 2, 2016...2,500,000
January 2, 2017...2,500,000
January 2, 2018...2,500,000
January 2, 2019...2,500,000
How much is the output VAT on January 2, 2016?
Solution: Step-by-step
1) Check if Installment payments (all installment payments during the year of sale,
[if there is a mortgage assumed by the buyer, it shall also be included in the DP])
had EXCEEDED 25% of the contract price. (so dapat 26%)
2) In this problem, the IP did not exceed the CP (25% below), thus output VAT
may be paid in installment basis.
3) Thus:
a. 10m x 12% = 1.2m OUTPUT VAT
b. 1.2m x (2.5/10)*** = P300,000
c. The output VAT on January 2,2016 shall be P300,000
***(Initial DP's / Contract price [deed of sale])
AMS Electricians are engaged in a service business. It had gross receipts
amounting to 3,000,000 pesos rendered within the Philippines. Below items were
presented regarding gross receipts:
Cash sales amounted to 1,600,000 pesos.
Credit sales amounted to 800,000 pesos.
The remaining amount deemed constructive receipts.
How much business tax does AMS Electricians needs to pay?
Suggested answer:
First, we need to check whether AMS Electricians is VAT registered entity or not.
If VAT registered, then AMS needs to pay output VAT on based on their gross

Recit Questions for August 1

receipts. On the other hand, if AMS is not a VAT registered person, we need to
check whether his gross receipts exceed the threshold of 1,919,500 in order to be
liable for VAT, otherwise he is subject to 3 % OPT.
So in this case, gross receipts amounts to 3,000,000 pesos less the credit sales of
800,000 pesos (since A/R is not considered as part of gross receipts in sales of
services) which will result to 2.2M pesos. Then in that 2.2M, 600,000 pesos were
"deemed" to be constructive receipts. There is a need to check whether such
consideration were placed under the control of the service provider or not. If
considered as legit constructive receipts, then the gross receipts will amount to
2.2M, if not then it will amount to 1.6M.
If 2.2M is their total gross receipts, then AMS Electricians will be liable to 12%
VAT amounting to 264,000 regardless if VAT registered or not since it exceeds the
1,919,500 threshold. If 1.6M, VAT would be 192,000 if they are a VAT registered
entity, or 48,000 (3% OPT) if non-VAT registered.
A vat registered seller made the following sales at unreasonably lower selling
prices:
City of pangasinan: SP= 180,000 FV=257,000
City of Manila: SP= 300,000 FV= 500,000
Gandara trading company SP= 400,000 FV= 600,000
How much is the output vat?
Answer: 129,600
Sol: 180,000+30,000+600,000=1,080,000x.12= 129,600
The following were found on TS6 Merchandising books:
Purch price: .... P130,000
Insurance: . 15,000
Trade discount: ..18,000
Cash Discount (if paid w/in 13 days): ...10,000
Sales return and allowance
(proper credit made during month): .13,000
How much will be the output VAT?

Recit Questions for August 1

Ans: P13,680.
Gross selling price: 130000+15000=145000
allowed deduction: 18000+13000= 31000
net: 145k-31k= 114000
output vat: 114000*12%= 13680