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TAX Notes - Rex B. > Business Tax > Flashcards

Business Tax Flashcards

1
Q

Nature of Business Tax

A
  1. Relative consumption tax
  2. Indirect tax
  3. Privilege tax
  4. National tax
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2
Q

Types of Business Tax

A
  1. VAT
  2. Percentage tax (Specific or General %)
  3. Excise tax
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3
Q

Taxable persons under Business Tax

A

Business- habitual engagement in commercial activity

  1. Individuals
  2. Corporations
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4
Q

Types of Business Registration

A
  1. VAT taxpayer
  2. Non-VAT taxpayer
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5
Q

Basis of Business Taxation

A
  1. Seller of Goods/ Properties :Gross Sales
  2. Seller of Service/ Lease of properties : Gross Receipts
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6
Q

Types of Sales or Receipts

A
  1. Sales of Goods
  • Exempt Sales
  • Vatable Sales
  1. Sales of Services
  • Exempt receipts
  • BICAP FLOW
  • Vatable receipts
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7
Q

Exempt Sale of Goods or Properties

(SECRET Tax-free Gold)

A

Sales of Basic necessities to Senior citizens and PWDs
Sale of Exempt goods
Sales of goods by Cooperatives
Sales of Residential properties
Export sales by Non-VAT persons
Treaty exempt sale of goods
Tax-free exchange of property
Sale of Gold to BSP

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8
Q

Exempt Sale of Services

(SEARCHH VA TRIPS)

A

Schools
Employees
Agricultural contract growers & millers
Residential leasing
Cooperatives
Hospitals
Home owners’ association and Condominium Corporations
Lease of passenger or cargo vessels and aircrafts
Treaty exempt services
Regional or Area Headquarters of multinational companies
International carriers on transport of passengers
Printers or Publishers
Essential service to Senior Citizens & PWDs

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9
Q

Other Exempt Sale of Goods/Services

(CUNS)

A
  1. Sales of Capital Assets by VAT or Non-VAT Business
  2. Sales of **Assets held for use by Non-VAT Taxpayers
  3. Sales of Goods or Service by Persons not engaged in business
  4. Sales of Goods or Service subject to Special laws
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10
Q

Receipt from Services subject to Specific Percentage Tax

(BICAP FLOW)

A

Bank and Non-bank Financial Intermediaries
International carriers of cargo
**Common carriers by land of people
Certain Amusement places
PSE sale of Stocks by Non-dealers
Certain Franchise grantees
Life insurance
Overseas Communication
Certain Winnings

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11
Q

Special Exemption to Percentage Tax

A
  1. Cooperatives
  2. Self-employed individuals/professionals (SEP) availing 8% on gross sales or receipt and other non-operating income
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12
Q

Business Tax Compliance

A

2551Q

Within 25 days after end of each taxable quarter

Special deadlines:

  • 20 days from EOQ (Overseas Communication & Amusement Tax)
  • 20 days from specified event (Winnings and Persons retiring in business)
  • 5 banking days from date of collection (Stock brokers on Sale of Stocks thru PSE)
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13
Q

VAT Threshhold

A
  • TV or Radio franchise - 10M per year
  • Other taxpayers- 3M Vatable sale/receipts in last 12 months
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14
Q

Tax Treatment of Taxpayers

A
  1. Non-VAT taxpayers
  • Below threshold
  • subject to 3% General Percentage Tax
  1. VAT taxpayers
  • above threshold
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15
Q

Types of VAT Registration

A
  1. Mandatory
  2. Voluntary
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16
Q

Value Added Tax (VAT) computation

A

Output VAT
- Input VAT
= VAT due
- Tax Credit
= VAT payable

17
Q

Types of Output VAT

A
  1. 12% VAT - for Donestic consumption
  2. 0% VAT - for Foreign & Special consumption
18
Q

Sources of 12% Output VAT

A
  1. Sale of Vatable Goods
  2. Sale of Vatable Service
  3. Sale of Vatable Real properties
  4. Transactions Deemed sales
19
Q

Transactions “Deemed Sales”

A
  1. Consignment- not withdrawn in 60 days
  2. Not used for Business
  • Personal use of goods withdrawn
  • Dacion en pago
  • Property Dividend
  1. Retirement from or Cessation of Business
  2. Change of Status (from VAT to Non-VAT)
20
Q

Seller’s option on Exempt Goods

A

Sellers may opt to apply the 12% VAT on the sales of exempt goods

Such option shall be irrevocable for 3 years.

21
Q

Zero-rated VAT Sale of Goods

A
  1. Direct Exports
  2. Sale of goods, supplies, equipment to persons engaged in international shipping or transport (must be exclusive of international transport use)
  3. Sales to persons or entities whose exemption under special law or international agreement to which the Philippines is a signatory effectively subject such sales to zero rates
  4. Sales to export processing zones (under status quo)
22
Q

Zero-rated VAT Sale of Services

A
  1. Sales of services to non-residents
  • Rendered in the Philippines
  • Paid for in acceptable foreign currencies
  1. Transport of passengers by Domestic air or sea carriers from Philippines to a foreign country
  2. Sale of power or fuel generated through renewable sources of energy
  3. Sales to persons exempt under special laws or international agreements
  4. Services rendered to persons engaged in international shipping or air transport operations (must be exclusive on international transport service)
23
Q

Input VAT

A

The VAT paid on purchases including incentives allowed by the law as credit against Output VAT

24
Q

Creditable Input VAT

A
  1. It must be paid in the course of business
  2. It must be billed by a VAT supplier
  3. Evidenced by an VAT invoice or VAT receipt
25
Q

Sources of Input VAT

(TRAPSI)

A
  1. Transitional input VAT
  2. Regular input VAT
  • Purchase of goods
  • Purchase of services
  • Purchase of capital goods- MAAC
  1. Amortization of deferred input VAT
  2. Presumptive input VAT
    5 Standard input VAT
  3. Input VAT carry-over
26
Q

Note on 5% Final VAT

A
  1. Withholding does not apply to:
  • purchases of goods or services arising from projects funded by Official Development Assistance (ODA) - payment for lease or use of property or property rights to non-resident owners (12%)
  1. Beginning January 1, 2021, this VAT withholding system will shift from final to a creditable system
  2. Remittance of final VAT shall be within 10 days following the month of withholding
27
Q

VAT Tax Credits

A
  1. Estimate VAT payments
  2. VAT withheld by government, GOCCs and LGUS
  3. Advanced VAT
  • Manufacturers of refined sugar or flours
  • Owners or transporters of timber
  1. Others
28
Q

Compliance of VAT

A

A. Filing of returns

  1. 2550M on or before the 20th day following the end of the month
  2. 2550Q on or before the 25th day following the end of the quarter

B. Invoicing requirement

  1. VAT invoice for every sale, barter or exchange of goods or properties
  2. VAT official receipts for every lease of goods or properties and for every sale, barter or exchange of services

C. Accounting requirement

  1. Maintain the usual regular accounting records
  2. Maintain subsidiary sales journal and subsidiary purchase journal

TAX Notes - Rex B. (21 decks)

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