ZERO-RATED VAT-EXEMPT

OUTPUT TAX X X

INPUT TAX
X

RELIEF TOTAL PARTIAL

SALES TAXABLE NOT TAXABLE

ANGIE SALEC-AMER, CPA

1
 Sales: 1,120,000
TAX TREATMENT Purchases : 1,680,000

REGULAR ZERO- VAT-

REGULAR ZERO- VAT- RATED EXEMPT
RATED EXEMPT
OT 120 0 0

OT 12% 0% 0% IT 180 180 0

(60) (180) 0

IT 12% 12% 0% TREATMENT TAX

CREDIT
TAX CREDIT
OR
Any input
tax from
REFUNDABLE
purchases
is
SALES : 1,120 UNRECOVE
PURCHASES: 1,680 RABLE

ANGIE SALEC-AMER, CPA 2

AUTOMATICALLY ZERO-RATED EFFECTIVELY ZERO-RATED

1. Generally refers to the EXPORT 1. Refer to the LOCAL SALE of

SALE of gps of a VAT registered gps by a VAT-registered person
person to a person or entity who was
granted INDIRECT TAX
EXEMPTION
2. No need to file from BIR 2. Application is needed.

3. Sales to registered ECOZONES 3. Sales to foreign embassies

and FREEPORT ZONES enterprise and personnels

ANGIE SALEC-AMER, CPA 3

 AUTOMATICALLY EFFECTIVELY
ZERO-RATED SALES ZERO-RATED SALES

1. EXPORT SALES Sales to persons or

2. FOREIGN entities deemed tax-
CURRENCY exempt under
DENOMINATED SPECIAL LAW OR
SALES INTERNATIONAL
AGREEMENT

ANGIE SALEC-AMER, CPA 4

 GOODS OR PROPERTIES SERVICES

1. EXPORT SALES 1. SALE OF SERVICES TO NON-

RESIDENTS

2. FOREIGN CURRENCY 2. EFFECTIVELY ZERO-RATED

DENOMINATED SALES SALES OF SEVICES

3. SPECIAL LAWS OR 3. SALE OF POWER OR FUEL

INTERNATIONAL AGREEMENT GENERATED FROM RENEWABLE
SOURCES OF ENERGY

ANGIE SALEC-AMER, CPA 5

EXPORT SALES FOREIGN CURRENCY TAX-EXEMPT PERSONS OR
(DIE BOA) DENOMINATED SALES (FAND) ENTITIES

1. Direct export Sales paid for in acceptable SPECIAL LAWS

FOREIGN CURRENCY and
2. Indirect export accounted for in accordance 1. SBMA
with the rules and regulations of 2. PEZA
3. Export-oriented enterprise the BSP. 3. PNRC
4. PAGCOR
4. Bangko Sentral ng Pilipinas of goods ASSEMBLED or
(BSP) manufactured in the Philippines INTERNATIONAL
EXCEPT: AUTOMOBILES and AGREEMENTS
5. E.O. 226 ( The Omnibus NON-ESSENTIAL GOODS
Investment Code of 1987), and 1. ADB
other special laws to NON-RESIDENT 2. IRRI
3. UN such as
6. international shipping or For DELIVERY to a resident in WHO, UNICEF
international air transport the Philippines 4. USAID and its personnels
operations and contractors

5. embassies, qualified
employees and dependents-
subject to the RR

ANGIE SALEC-AMER, CPA 6

Sales of services to EFFECTIVELY ZERO- DOMESTIC CARRIERS Sale of POWER OR
NON-RESIDENTS RATED SALES of FROM PHILS TO A FUEL
services FOREIGN COUNTRY

1. Processing, 1.SPECIAL LAW or Outgoing transport From RENEWABLE

manufacturing or INTERNATIONAL services SOURCES of energy
repacking goods for AGREEMENT ZERO-RATED
other persons doing
business outside the Incoming
Phils, which goods -VAT-EXEMPT
are subsequently
exported

2. Other services 2. INTERNATIONAL

shipping or air
transport operations

3. enterprise whose
export sales exceed
70% of total annual
production (EXPORT-
ORIENTED
ENTERPRISE)

ANGIE SALEC-AMER, CPA 7

code Items ( A/M HER SIR VEC QT )
A/M Agricultural/ Marine Food Products
H Hospital services
E Education
R Regional Area/Administrative headquarters
S Safety Devices
I International transport of passengers by RF Carriers
R Real properties
V Vessels
E Employment
C Cooperatives
Q Quasi-importation
T Treaty or international agreement

ANGIE SALEC-AMER, CPA 8

 1. Sale of agricultural and marine food products in their original state,
livestock and poultry of a kind generally used as, or yielding or producing
foods for human consumption ; and breeding stock and genetic materials
therefore;

2. Sale of fertilizers; seeds; seedlings and fingerlings; fish, prawn, livestock

and poultry feeds, including ingredients, whether locally produced or
imported, used in the manufacture of finished feeds,
EXCEPT: SPECIALTY FEEDS;

3. Services of agricultural contract growers

ANGIE SALEC-AMER, CPA 9

 Medical, dental, hospital and veterinary
services

EXCEPT:
those rendered by PROFESSIONALS and sales
of drug by a hospital drug store

ANGIE SALEC-AMER, CPA 10

 1. SCHOOLS
2. BOOKS, NEWSPAPERS, MAGAZINE, REVIEW
OR BULLETIN

Educational services rendered by private

educational institution duly accredited by the
Department of Education, CHED, TESDA and
those rendered by government educational
institution.

ANGIE SALEC-AMER, CPA 11

 Supervisory
Communications
Coordinating centers

ANGIE SALEC-AMER, CPA 12

 Importation of LIFE-SAVING EUIPMENT, safety
and rescue euipment and communication and
navigational safety euipment, steel plates and
other metal plates, used for shipping
transport operations.

ANGIE SALEC-AMER, CPA 13

 The receipt from the transport of passengers
by international carriers originating from the
PHILS going abroad is now EXEMPT from
business tax under RA 10378.

OUGOING CARGOES, EXCESS BAGGAGE OR

MAILS- percentage tax

ANGIE SALEC-AMER, CPA 14

 Does not exceed the threshold- exempt

regular sales:

1,919,500
3,199,200
750,000
450,000
180,000

ANGIE SALEC-AMER, CPA 15

 Sale or lease of aircraft or sea vessels,
including engine, euipment and spare parts
thereof for domestic or international
operation

ANGIE SALEC-AMER, CPA 16

 Services performed pursuant to an employer-
employee relationship, engagement in business

RMC 77-2008:
engagement in business or trade involves the
following:

1. continuity of activity on a going concern basis

2. objective to earn unrestricted amounts of
pecuniary gains or profits.
3. unrestricted offering of the goods or service to
any customer or client

ANGIE SALEC-AMER, CPA 17

 10,000,000
ALL are taxable
EXCEPT: related activities of
members

10,000,000
ALL are EXEMPT
EXCEPT: ALL unrelated activities

ANGIE SALEC-AMER, CPA 18

RECEIPTS RELATED ACTIVITIES UNRELATED
ACTIVITIES

FROM MEMBERS 500,000 600,000

FROM NON-MEMBERS 400,000 200,000

TOTAL 900,000 800,000

ANGIE SALEC-AMER, CPA 19

 Importation of personal and household effects
belonging to RESIDENTS of the Phils RETURNING
from abroad and NON-RESIDENT CITIZEN coming
to resettle in the Phils

Importation of professional instruments and

implements, wearing apparel, domestic animals
and household effects
EXCEPT: any vehicle, vessel, aircraft, machinery
or other goods for use in the manufacture and
merchandise of any kind in commercial uantity.

ANGIE SALEC-AMER, CPA 20

 Transactions which are exempt under
international agreements to which the Phils is
a signatory or under SPECIAL LAWS

ANGIE SALEC-AMER, CPA 21

 BASED ON VOLUME:
BASED ON VALUE:

LANDED COST
+ EXCISE TAX
---------------
VALUE PER BOC TAXABLE BASE
X 12%
+ EXCISE TAXES ---------------
VAT ON IMPORTATION
___________________
TAXABLE BASE LANDED COST:
X 12% INVOICE AMOUNT
+ CUSTOMS DUTIES
---------------- + FREIGHT
+ INSURANCE
VAT ON IMPORTATION + OTHER CHARGES
------------------
LANDED COST
------------------

ANGIE SALEC-AMER, CPA 22

 Importation of machineries from USA

invoice cost, USA ($ 1: Php 50) $40,000

value per BOC p2,500,000
customs duties 60,000
freight and insurance 35,000

ANGIE SALEC-AMER, CPA 23

 BASED ON VALUE BASED ON VOLUME

value per BOC 2,500,000 invoice cost

( 40,000 x 50) 2,000,000
ADD:
X 12% customs duties 60,000
----------- other charges 35,000
VAT 300,000 ----------
======== 2,095,000
x 12%
----------
VAT 251,400
=======

ANGIE SALEC-AMER, CPA 24

 OUTPUT VAT XX
LESS: STANDARD INPUT VAT (7%) XX
NET VAT PAYABLE XX
LESS: FINAL WITHHOLDING VAT (5%) XX
OUTPUT VAT PAYABLE XX

ANGIE SALEC-AMER, CPA 25

 Output tax 24,000 Output tax 24,000
less: less:
actual input 16,800 actual input 12,000
standard input 14,000 standard input 14,000
expense (2,800) 14,000 other income 2,000 14,000
NET VAT PAYABLE 10,000 NET VAT PAYABLE 10,000
LESS: FWV (5%X200,000) 10,000 LESS: FWV (5%X200,000) 10,000
OUTPUT VAT PAYABLE 0 OUTPUT VAT PAYABLE 0
==== =====
1. purchases 140,000 1. purchases 100,000
input vat 16,800 input vat 12,000
cash(a/p) 156,800 cash(a/p) 112,000
2. Cash (a/r) 212,000 2. Cash (a/r) 212,000
creditable wVat 10,000 creditable wVat 10,000
creditable wIT 2,000 creditable wIT 2,000
sales 200,000 sales 200,000
output tax 24,000 output tax 24,000
3. Output tax 24,000 3. Output tax 24,000
i/e summary 2,800 input tax 12,000
input tax 16,800 Creditable wVAT 10,000
Creditable wVAT 10,000 i/e summary 2,000
.

Assume: Assume:
SALES: 200,000 SALES: 200,000
PURCHASE PRICE: 140,000 PURCHASE PRICE: 100,000

ANGIE SALEC-AMER, CPA 26

 RIT REGULAR INPUT TAX 12%
SIT STANDARD INPUT TAX 7%
PIT PRESUMPTIVE INPUT TAX 4%
TIT TRANSITIONAL INPUT TAX 2% of BI
(whichever is higher) or
AVP
DIT DEFERRED INPUT TAX
CO INPUT TAX CARRY-OVER

ANGIE SALEC-AMER, CPA 27

 4% of the GROSS VALUE in money of
purchases of primary AGRICULTURAL
products which are used as inputs in

PROCESSING: SM
MANUFACTURING : SON

ANGIE SALEC-AMER, CPA 28

 TIT on the inventory on hand as of the
effectivity of the VAT registration of
taxpayers who:

1. became VAT-registered persons upon

exceeding 1,919,500 in any 12-month period
or

2. voluntarily registers as a VAT payer even

NOT exceeding the threshold.

ANGIE SALEC-AMER, CPA 29

 CedNar corporation is a newly registered VAT
taxpayer manufacturing brown sugar. The
following are its data during the month.
Sales: 1,680,000
Purchases
Supplies from VAT registered suppliers 560,000
Packaging materials 22,400
sugarcane from planters 600,000
Salaries of officials and employees 300,000
inventory per balance sheet, Dec 1:
packaging materials 22,400
supplies purchased from VAT registered persons 67,200
supplies purchased from non-VAT person 50,000
compute the ff:
1. TIT
2. PIT
3. TOTAL CREDITABLE INPUT TAX
4. VAY PAYABLE

ANGIE SALEC-AMER, CPA 30

 Assume the following data of Visayan Educational Supply,
VAT registered, engaged in selling books, school supplies and
gift items.
Sales
school supplies (gross of VAT) 896,000
books 300,000
gift items (net of VAT) 200,000
Purchases
school supplies and gift items 560,000
books 200,000
purchase of computer both used in
taxable and exempt transactions 112,000
a. compute the creditable input tax on the purchase of computer
b. compute the vat payable

ANGIE SALEC-AMER, CPA 31

CrisLenton Partnership revealed the following
records in its books of accounts:
Sales
from VAT business 672,000
from Non-VAT business 200,000
Purchases
From VAT business 500,000
from Non-VAT business 100,000
for use in VAT and
non-VAT business 200,000
Compute: VAT PAYABLE

ANGIE SALEC-AMER, CPA 32

 Compute Output tax for the month of November and December.
Assume all amounts are exclusive of VAT.

Elton is a real estate dealer. During the month of November, he sold lots under the
following items: Lot 1 Lot 2 Lot 3

Selling price 500,000 1,000,000 2,000,000

cost 400,000 800,000 1,900,000

Gain 100,000 200,000 100,000

Terms:

Downpayment, 50,000 200,000 450,000

November

Due December 50,000 60,000 50,000

ANGIE SALEC-AMER, CPA 33

 Maam Arnie Panganiban, 60 years old, took an
air-conditioned bus in Toledo with a normal fare
of 150.00.

A. How much should be paid by Maam

Panganiban to the bus conductor?

B. Assuming she took an airplane going to Manila

and the fare was 2,800. How much should be
paid by Maam Panganiban?
What if she was accompanied by a PWD Friend,
what will be the latters fare?

ANGIE SALEC-AMER, CPA 34

 Rosiecole Corp, a VAT registered business, had the
following data:
export sales 500,000
vat-exempt sales 200,000
domestic sales 896,000
Purchases of goods from VAT supplier
for (exclusive of VAT)
export sales 200,000
zero-rated sales 100,000
domestic sales 672,000
purchase of equipment not used
in the business 224,000
compute vat payable

ANGIE SALEC-AMER, CPA 35

 MagVelas, a VAT registered taxpayer, had the following data on importation:

For sale For own use

Invoice cost (1$: 52) $ 5,ooo $2,000

Customs duties 12% 8%

freight 10,000 6,000

insurance 20,000 7,000

Other charges 5,000 3,000

ANGIE SALEC-AMER, CPA 36