Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
PRE-BAR LECTURE
► Impact of Taxation
(or who bears the burden of taxation)
► FINAL CONSUMER
► Incidence of Taxation
(or who is statutorily liable to pay the tax)
► SELLER UPON WHOM THE TAX HAS BEEN IMPOSED
Tax Credit Method
► RATE: 12%
► “Goods or Properties”
► All tangible and intangible objects which are capable of pecuniary
estimation and shall include:
a) Real properties held primarily for sale to customers or held for
lease in the ordinary course of trade or business;
b) The right or the privilege to use patent, copyright, design or
model, plan, secret formula or process, goodwill, trademark,
trade brand or other like property or right;
c) The right or the privilege to use in the Philippines of any
industrial, commercial or scientific equipment;
d) The right or the privilege to use motion picture films, films, tapes
and discs; and
e) Radio, television, satellite transmission and cable television
time. (Section 106 (A)(1), NIRC)
VAT on Sale of Goods and Properties
► Requisites of Taxability
1. There is an actual or deemed sale of goods or properties for a
valuable consideration;
2. It was undertaken in the course of trade or business
3. It was for use or consumption in the Philippines;
4. It is not exempt from VAT under the Tax Code, special law, or
international agreement
(Mamalateo, Reviewer on Taxation, 2nd. Ed. 2008)
Real Property
► General Rule:
► Sale of real properties held primarily for sale to customers or held
for lease in the ordinary course of trade or business of the seller -
subject to VAT. (Section 4.106-3, RR 16-2005, as amended by RR 04-07)
Real Property
Requisites of Taxability
(1) The seller executes a deed of sale, barter or exchange,
assignment or conveyance, or contract to sell of real property;
(2) The real property is located within the Philippines;
(3) The seller or transferor is engaged in real estate business either
as a real estate dealer, developer or lessor;
(4) The real property is held primarily for sale or for lease in the
course of his trade or his business;
(5) The sale is not exempt from VAT under the Tax Code, special law
or international agreement. (Mamalateo, Reviewer on Taxation, 2nd Edition)
Real Property
A. Sale of Real property on B. Sale of Real Property on
Installment Deferred Payment
Instance of Taxability Definition
Note: The threshold on the sale of residential lot was adjusted from P1,500,000 to P1,919,500.00 while the sale of
residential house and lot increased from P2,500,00.00 to PhP3,199,200.00 (RR 16-11)
Zero-rated Sale of Goods or Properties
► Continued…
2. The lease or the use of, or the right to use of any industrial,
commercial or scientific equipment;
7. The lease of motion picture films, films, tapes and discs; and
► Gross Receipts
► “(M)eans the total amount of money or its equivalent representing
the contract price, compensation, service fee, rental or royalty,
including the amount charged for materials supplied with the
services and deposits and advanced payments actually or
constructively received during the taxable quarter for the services
performed or to be performed for another person, excluding value-
added tax.” (Section 108(A), NIRC)
Zero-rated Sale of Services
► where:
► sale of goods/properties and/or services and the use or lease of
properties that is not subject to VAT (output tax);
► seller is not allowed any tax credit of VAT (input tax) on purchases. (Sec.
4.109-1, RR 16-05)
► Person making the exempt sale shall not bill any output tax to
his customers because the transaction is not subject to VAT.
(Sec. 4.109-1, RR 16-05)
6. Services by agricultural contract growers and milling for others of palay into
rice, corn into grits and sugar cane into raw sugar or raw cane sugar;
“Agricultural contract growers” refers to those persons producing for
others poultry, livestock or other agricultural and marine food products
in their original state. (Sec. 4.109-1(B)(1)(f), RR 16-2005) (as amended by RA 10864
dated June 10, 2016)
11. Transactions which are exempt under international agreements to which the
Philippines is a signatory or under special laws except those granted under
PD No. 529 (Petroleum Exploration Concessionaires under the Petroleum
Act of 1949); and
VAT Exempt Transactions (Section 109, NIRC)
12. Sales by agricultural cooperatives duly registered and in good standing with
the Cooperative Development Authority (CDA) to their members, as well as
sale of their produce, whether in its original state or processed form, to non-
members; their importation of direct farm inputs, machineries and
equipment, including spare parts thereof, to be used directly and exclusively
in the production and/or processing of their produce;
16. Sale of real properties not primarily held for sale to customers or held for
lease in the ordinary course of trade or business, or real property utilized for
low-cost and socialized housing as defined by Republic Act No. 7279,
otherwise known as the Urban Development and Housing Act of 1992, and
other related laws, residential lot valued at P1,919,500 (previously
P1,500,000) and below, house and lot, and other residential dwellings
valued at P3,199,200 (previously P2,500,000) and below;
VAT Exempt Transactions
a. Sale of real properties not primarily held for sale to customers or held for
lease in the ordinary course of trade or business.
However, even if the real property is not primarily held for sale to customers
or held for lease in the ordinary course of trade or business but the same is
used in the trade or business of the seller, the sale thereof shall be subject to
VAT being a transaction incidental to the taxpayer’s main business. (as
amended by RR 04-07)
d. Sale of residential lot valued at P1,919,500.00 and below, or house & lot
and other residential dwellings valued at P3,919,200.00 and below. (as
amended by RR 16-2011)
If two or more adjacent residential lots are sold or disposed in favor
of one buyer, for the purpose of utilizing the lots as one residential
lot, the sale shall be exempt from VAT only if the aggregate value of
the lots do not exceed P1,919,500.00.
Adjacent residential lots, although covered by separate titles and/or
separate tax declarations, when sold or disposed to one and the
same buyer, whether covered by one or separate Deed of
Conveyance, shall be presumed as a sale of one residential lot.
VAT Exempt Transactions (Section 109, NIRC)
► This however, does not include the sale of parking lot which may or may
not be included in the sale of condominium units. The sale of parking lots
in a condominium is a separate and distinct transaction and is not
covered by the rules on threshold amount not being a residential lot,
house & lot or a residential dwelling, thus, should be subject to VAT
regardless of amount of selling price.
VAT Exempt Transactions (Section 109, NIRC)
17. Lease of a residential unit with a monthly rental not exceeding P12,800
(previously P10,000):
Where the monthly rental per unit exceeds P12,800.00 but the aggregate of
such rentals of the lessor during the year do not exceed P1,919,500.00, the
same shall likewise be exempt from VAT, however, the same shall be
subjected to 3% percentage tax.
VAT Exempt Transactions (Section 109, NIRC)
► In cases where a lessor has several residential units for lease, some are
leased out for a monthly rental per unit of not exceeding P12,800.00 while
others are leased out for more than P12,800.00 per unit, his tax liability will
be as follows:
1. The gross receipts from rentals not exceeding P12,800.00 per month per
unit shall be exempt from VAT regardless of the aggregate annual gross
receipts.
2. The gross receipts from rentals exceeding P12,800.00 per month per unit
shall be subject to VAT if the aggregate annual gross receipts from said
units only (not including the gross receipts from units leased for not more
than P12,800.00) exceeds P1,919,500.00. Otherwise, the gross receipts
will be subject to the 3% percentage tax.
VAT Exempt Transactions (Section 109, NIRC)
► The term 'residential units' shall refer to apartments and houses & lots used
for residential purposes, and buildings or parts or units thereof used solely
as dwelling places (e.g., dormitories, rooms and bed spaces) except motels,
motel rooms, hotels, hotel rooms, lodging houses, inns and pension houses.
► The term 'unit' shall mean an apartment unit in the case of apartments,
house in the case of residential houses; per person in the case of
dormitories, boarding houses and bed spaces; and per room in case of
rooms for rent. (Sec. 4.109-1(B)(1)(q), RR 16-2005, as amended by RR 16-11)
VAT Exempt Transactions (Section 109, NIRC)
* Become liable to VAT upon exceeding the minimum turnover of P1,919,500.00 in any 12-month period, or
who voluntarily register even if their turnover does not exceed P1,919,500.00 (except franchise grantees of
radio and television broadcasting whose threshold is P10,000,000.00) (Sec. 4.111-1(a), RR 16-2005)
Presumptive Input Tax
* “Processing” shall mean pasteurization, canning and activities which through physical or chemical
process alter the exterior texture or form or inner substance of a product in such manner as to
prepare it for special use to which it could not have been put in its original form or condition."
Determination of Output Tax
* The claim for tax credit shall include not only those filed with the Bureau of Internal Revenue but
also those filed with other government agencies, such as the Board of Investments and the Bureau of
Customs. (Sec. 110(C), 1997 NIRC)
Excess Output or Input Tax
► output tax exceeds input tax - excess shall be paid by the VAT-
registered person.
Illustration:
ERA Corporation has the following sales during the month:
A. The input tax attributable to sales to private entities subject to 12% VAT, for the
month, shall be computed as follows:
B. The input tax attributable to zero-rated sales for the month shall be computed as
follows:
C. The input tax attributable to VAT-exempt sales for the month shall be computed as
follows:
D. The input tax attributable to sales to government for the month shall be
computed as follows:
Excess
Total Creditable Input Input Unrecoverable
Output Net VAT
Input Input VAT for VAT for input
VAT Payable
VAT VAT carry- refund VAT
over/
Sale Subject to 0%
0 8,000 8,000 0 8,000 OR 8,000 0
VAT
Sale of Exempt
0 7,000 0 0 0 0 7,000*
Goods
Sale to Government
subject to 5% Final 12,000 9,000 7,000** 5,000*** 0 0 2,000*
withholding VAT
* These amounts are not available for input tax credit but may be recognized as cost or expense.
** Standard input VAT of 7% on sales to Government as provided in SEC. 4.114-2(a)
*** Withheld by Government entity as Final Withholding VAT
The input tax attributable to VAT-exempt sales shall not be allowed as credit against the output tax but should be treated as part of
cost or expense.
Substantiation of Input Tax Credits
► A cash register machine tape is valid proof of substantiation of tax credit only
if it shows the information required under the Tax Code.
► In case of full or partial denial of the claim for tax refund or tax credit, or the
failure on the part of the Commissioner to act on the application within the
120-day period prescribed, the taxpayer affected may, within 30 days from the
receipt of the decision denying the claim or after the expiration of the one
hundred twenty day-period, appeal the decision or the unacted claim with the
Court of Tax Appeals. (Sec. 112(C), 1997 NIRC)
Compliance of 120+30 day period in judicial claim for refund
of unutilized input VAT attributable to zero-rated sales
Facts:
► These are consolidated cases involving claims for refund of unutilized input
VAT separately filed by Mindanao II Geothermal Partnership (or Mindanao II)
and Mindanao I Geothermal Partnership (Mindanao I) with the BIR and the
CTA.
Facts:
► The CTA denied Mindanao I’s claim for refund for all 4 quarters of 2003
because the judicial claims were filed prematurely in violation of Section112
(C) of the Tax Code and the decision of the Supreme Court in CIR vs. Aichi
Forging Company of Asia, Inc. (G.R. No. 184823 promulgated October 6,
2010).
► The CTA ruled that Mindanao II’s claims for the first and second quarters of
2003 were filed beyond the prescriptive period.
Compliance of 120+30 day period in judicial claim for refund
of unutilized input VAT attributable to zero-rated sales
Ruling
► Mindanao I and II are partially entitled to their respective claims for VAT
refund. Certain portions of their claims are denied for their failure to file the
administrative and/or judicial claims for refund within the prescribed periods.
Mindanao I and II’s first quarter claims filed with the BIR beyond the two-
year period:
► Under Section 112 of the Tax Code, a VAT-registered person may file a claim
for refund of unutilized input VAT attributable to its zero-rated sales within two
years from the close of the taxable quarter when the sales were made.
Compliance of 120+30 day period in judicial claim for refund
of unutilized input VAT attributable to zero-rated sales
Mindanao I and II’s second quarter claims filed before the lapse of the 120-
day period:
► Section112(C) of the Tax Code expressly states that the taxpayer may appeal
to the CTA within 30 days from receipt of the denial by the CIR of the claim for
refund or from the inaction of the CIR after the lapse of the 120-day period.
The 120-day waiting period is mandatory and jurisdictional. The filing of the
appeal with the CTA before the lapse of the 120-day period renders the
petition premature.
Compliance of 120+30 day period in judicial claim for refund
of unutilized input VAT attributable to zero-rated sales
► However, BIR Ruling No. DA-489-03 dated December 10, 2003, a general
interpretative ruling issued in response to a query made by the DOF’s One
Stop Shop Inter-Agency Tax Credit and Drawback Center, is an exception to
the rule in the Aichi Forging case and constitutes equitable estoppel in favor
of taxpayers. This ruling expressly states that the taxpayer-claimant need not
wait for the lapse of the 120-day period before it could seek judicial relief with
the CTA by way of petition for review.
Compliance of 120+30 day period in judicial claim for refund
of unutilized input VAT attributable to zero-rated sales
► Mindanao II is not entitled to a refund of its excess input VAT for the third and
fourth quarters as its appeal to the CTA was filed late. Although Mindanao II
filed its claim with the BIR on time, it did not file its petition with the CTA within
30 days after the expiration of the 120-day period given to the CIR to decide
on its claim. For this reason, Mindanao II’s judicial claim will have to be
rejected because of late filing.
► Mindanao II cannot claim the benefit of BIR Ruling No. DA-489-03. Unlike its
claim for the second and third quarters, it did not file its judicial claim before
the lapse of the 120-day period. Instead, it filed its claim with the CTA after the
lapse of the 30-day period to appeal with the CTA from the expiration of the
120-day period given to the CIR to decide.
Compliance of 120+30 day period in judicial claim for refund
of unutilized input VAT attributable to zero-rated sales
a. An administrative claim must be filed with the CIR within two years after the
close of the taxable quarter when the zero-rated or effectively zero-rated
sales were made.
b. The CIR has 120 days from the date of submission of complete documents in
support of the administrative claim within which to decide whether to grant a
refund or issue a tax credit certificate. The 120-day period may extend
beyond the two-year period from the filing of the administrative claim if the
claim is filed in the later part of the two-year period. If the 120-day period
expires without any decision from the CIR, then the administrative claim may
be considered to be denied by inaction (RMC 054-14).
c. In case of denial of the claim or in case of inaction by the BIR within the 120
day period, the taxpayer must appeal to the CTA within thirty (30) days from
receipt of the denial or from lapse of the 120-day period.
The “deemed denied” provision under RMC 054-14
will not apply to claims for VAT Refund filed before
June 11, 2014
► Claims for refund filed before such date will continue to be processed
administratively by the BIR provided that the taxpayer submitted the complete
documents before the 2-year prescriptive period for filing a claim of VAT
refund under Section 112(A) of the Tax Code (RR 1-2017)
► The following claims filed and pending before the effectivity of RMC 54-2014
are not covered by this rule:
1. Claims filed beyond the 2-year statutory prescriptive period under 112(A)
of the Tax Code;
2. Claims denied in writing by the approving authority;
3. Claims approved or granted fully or partially by the approving authority;
4. Claims already appealed to and pending with the CTA unless there is
proof of withdrawal of the case filed with the CTA.
Manner of giving Refund
(2) A VAT official receipt for every lease of goods or properties, and for every
sale, barter or exchange of services. (Sec. 113(A), 1997 NIRC)
► Only VAT-registered persons are required to print their TIN followed by the
word "VAT" in their invoice or official receipts. Said documents shall be
considered as a "VAT Invoice" or VAT official receipt. All purchases covered
by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give
rise to any input tax.
(3) In the case of sales in the amount of one thousand pesos (P1,000.00) or
more where the sale or transfer is made to a VAT-registered person, the
name, business style, if any, address and TIN of the purchaser, customer or
client, shall be indicated in addition to the information required in (1) and (2)
of this Section.
Invoicing and Recording of deemed sales
transactions