Catanduanes State University

College of Business and Accountancy

Virac, Catanduanes

GROUP ACTIVITY
(Business tax)

GROUP 4:
DELA PEÑA, CHRISTIAN L.
ARCILLA, HANNA MAE D.
PEÑA, KRISTEL ANNE D.
TEMPLO, FATIMA FLOR A.
TUMANLAO, MA. CATHERINE O.
Exercise 18-3
1. D.
2. C.
3. D.
4. A.
5. A.
6. C.
7. B.
8. C.
9. D.
10. D.

Solution:
4.
Net of Php 371, 250
Divided by: (100%-1%) 99%
Total 375,000
Multiply by: 3/28
Net Taxes Due Php40, 178.57or P40,179

5.
Output Tax
Gross Sales Php8,721,50
0
Less: Sales Php 8,481,000 * Php 908, 679
Returns 240,500 3/28
Input Tax
Purchases
7,398,000
Less: Purchase 769,607
Returns 215,000 7,183,000*3/28
Less: Deferred Input 58,000
Tax
VAT Payable Php 81,072

6. Output Tax ( Php 336,000*3/28) Php 36,000

Less: Input Tax (Php 12,000
100,000*12%)
VAT Payable Php 24,000
7.
Output Tax ( Php 550,000*3/28) Php 58,929
Less: Input Tax (Php 17,619
165,000*3/28)
VAT Payable Php 41,250

8. Output Tax
Sales (Php 200,000*12%) Php 24,000
Less: Input Tax (Php 8,400
70,000*12%)
Vat Paid 5,000
VAT Payable Php 10,600

9. Output Tax
Hotel-room rentals Php 24,640
Restaurant-food and 37,440
refreshment
-wines and beers 19,440
Total 81,520
Multiply By: 12%
Output Tax Php978,240
10.
Output Tax
Sales, food and soft drinks Php280,550
Sales, wines and beers 152,400 P432,950 *12% Php51,954
Less: Input Tax
Purchases, food and soft drinks- VAT
business 110,220
Purchases, wines and beer- VAT
business 101,250 211,470*12% 25,376
VAT Payable Php26,578

EXERCISE 18-4
1. Gross receipts from food and refreshments (116,200 x 12%) Php
13,944
Gross receipts from wines and beer (58,600 x 12%) 7,032
Output Tax Php 20,976
Less: Input Taxes
Purchase of food and refreshments (51,000 x 12%) Php 6,120
Purchase of wines and beer (39,500 x 12%) 4,740
10,860
VAT Payable Php 10,116

Answer: D. Php 10,116

2. Gross receipts from food and refreshments Php 116,200
Gross receipts from wines and beer 58,600
Total Php 174,800
Multiply by 18%
Tax Due Php 31,464

Answer: D. Php 31,464

3. Output Tax
Total billing for completed work Php 850,000
Accounts Receivable, April 1 180,000
Accounts Receivable, June 30 (120,000)
Total Php 910,000
Multiply by 12%
Php109,200
Less: Input Tax (480,000 x 12%) 57,600
VAT Payable Php 51,600

Answer: B. Php 51,600

4. Output Tax
Contract 1: Collections Php 1,200,000
Contract 2: Collections 950,000
Contract 3: Collections 200,000
Total Php 2,350,000
Multiply by 12%
Php 282,000
Less: Input Taxes
Materials – VAT (850,000 x 95%) Php 807,500
Subcontractors – VAT (1,250,000 – 50,000) 1,200,000
Advances to subcontractors – VAT 150,000
Total Php 2,157,500
Multiply by 12%
258,900
VAT Payable Php 23,100
Answer: A. Php 23,100
 5. Output Tax
Cash sales, invoice amount Php 660,800
Sales on account 246,400
Consignment shipment (more than 60 days) 22,400
Goods paid to creditors 16,800
Goods given as Christmas gift to employees 19,040
Property dividend to stockholders 8,960
Total Php 974,400
Multiply by 12/112
Php 104,400
Less: Input Tax
Purchases (291,200 x 12/112) 31,200
VAT Payable Php 73,200

Answer: D. Php 73,200

Exercise 18-5. DISCUSSION QUESTIONS/PROBLEMS

1. Situs of Service
Answer: Yes, Nora is subject to VAT. The real estate professionals (i.e. real estate
broker) under Professional Regulation Commissions whose income payments (i.e.
on gross commissions of customs, immigration, stock, immigration and commercial
brokers, fees of agents or brokers) to them are considered professional fees is
subject to 15% if the gross income of their current year Php 720,000 or 10% if
otherwise.
2.Gross Receipts
Answer:
a. No, the plan of WG & A is not correct because accounts receivable should not be
included in the gross receipts, which is the tax base in computing for the output tax.
One of the requirements for taxability of services is the consideration must be
received actually or constructively. Accounts receivable is not yet collected so it
should not be used in computing for output tax.
b. The company should wait until their accounts receivable be collected or do
something for the collection of it. They may demand their customers to pay their
payables, if it is already demandable. When they already have their collections, they
can now compute for their output tax and eventually their VAT payable then remit it
to the BIR.
3. Travel Agents and Travel Agents Exporters
Answer: The application of normal VAT rules implies that the travel agents would be
required to charge VAT on the total amount of the supply of a travel package rather
then on just their profit margin, but in those cases they would also be allowed to
deduct the VAT that is charged to them. The result is that, although the total amount
of VAT charged by the travel agent to his client would be higher than under the
margin scheme, the actual cost of the travel package net of VAT should be lower
because the travel agent would be able to deduct the VAT paid to his suppliers so he
does not have to build the cost of VAT into the price of the package. The services
within the Philippines are subject to zero-rating on sales.
Furthermore, when the travel agent avails of this option to be taxed under normal
rules, a taxable client purchasing a travel package for business purpose, e.g. for
organizing a business seminar or business trips, would in turn be allowed to deduct
the VAT included in the price of the package which the travel agent sells to him.

4. Fish Brokers
Answer: Yes, because the fish and other products are basically owned or produced
by the traders. Also, fish brokers are one of the examples of commercial brokers
which is subject to value-added tax.
5. Hotel and Restaurant Industry
Room Charges P392,000
Laundry Services 7,392
Food and Beverages Consumption 806,400
Corkage 9,020
Handling Charges 2,464
Cake Shop Sales 9,184
Gross Receipt P 1,226,460
Tax Rate 12%
Output Tax P147,175.2

6. Broadcast Media
a. How much is the VAT payable of the advertising Agency?
Service Fee (P220,000 x 15% ) P 33,000
Tax Rate 12%
VAT payable P 3,960
b. Assuming the radio station has an input tax of P 8 000. How much is the
VAT payable by the radio station DZGE?
Output Tax (P 187 000 x 12%) P 22,440
Input Tax (8,000)
VAT payable P 14,440
7. Professional Services
Answer: An independent consultant shall be subject to 12% VAT if his gross receipts
exceed P1,919,500. And since he is engaged in general professional partnership he
is not subject to value-added tax.
Answer: Yes, he will be subject to VAT if his gross receipts exceeds P1,915,500.
8. Non-life Insurance
Answers:
a. not included
b. not included
c. not included
d. not included
e. not included
9. Cinematographic film owner or lessor
Answer: Eks Video Shop being a cinematographic film owner and lessor shall be
subject to 12% regular VAT if their annual gross receipts exceed the P3,000,000
VAT threshold. In general, all forms of lease of properties held primarily for lease to
customers in the ordinary course of trade or business, whether real or personal shall
be subject to VAT unless the gross annual receipts of the lessor do not exceed
P3,000,000.00.
The lease or use of tangible property is grouped as industrial, commercial, or
scientific equipment, including the supply of any assistance that is ancillary and
subsidiary to and is furnished as a means of enabling the application or enjoyment of
such properties, motion pictures, films, tapes and discs.

EXERCISE 18-6: CASE PROBLEM

Answer: No. Unutilized input VAT payments not otherwise used for any internal
revenue tax due the taxpayer must be claimed within two years after the close of the
taxable quarter when the relevant sales were made pertaining to the input VAT
regardless of whether said tax was paid or not. When a Zero- rate VAT taxpayer
pays its input VAT a year after the pertinent transaction, said taxpayer only has a
year to file a claim for refund or tax credit of the unutilized creditable input VAT.
Given that the last creditable input VAT due for the period covering the progress
billing of September 1996 is the third quarter of 1996 ending on 30 September 1996,
any claim of in unutilized creditable input VAT refund or tax credit for said quarter
prescribed on 30 September 1998.
Consequently, respondent's claim for refund or tax credit filed on 20 December 1999
had already prescribed.
EXERCISE 19 – 2
1. Answer: C. Facilitation Fee

2. Landed Cost Php 250,000

Multiply by 12%
VAT Payable Php 30,000

Answer: C. Php 30,000

3. Purchase Price (12,500 / 10%) Php 125,000

Customs Duty 12,500
Other Charges 9,500
Landed Cost Php 147,000
Multiply by 12%
VAT Payable Php 17,640

Answer: A. Php 17,640

4. CIF Value Php 225,645

Bank Charges 3,550
Wharfage 1,525
Arrastre Charges 2,295
Customs Duty 6,000
Brokerage Fee and Documentary Stamps 307
Marine Cargo Insurance 2,550
Landed Cost Php 241,872
Multiply by 12%
VAT Payable Php 29,024.64
Answer: B. Php 29,024.64
5. Output Tax (275,000 x 12/112) Php 29,464.29
Less: Input Taxes
On Importation Php 29,024.64
Freight (2,000 x 12%) 240.00 29,264.64
VAT Payable Php 199.65

Answer: C. Php 199.65

EXERCISE 20-2
1.A
2.B
3.B
4.A
5.D
6.C
7.C
8.C
9.B
10.B
Solution:
5. P300,000 x 12%= P36,000
P36,000 / 6 = P6,000
7. P66,000 – 33,000 (50%) = P33,000
P33,000 + 3,960 (12%) = P36,960