BUSINESS TRANSACTIONS EXEMPT FROM BUSINESS TAXES Flashcards
What are the exempt consumptions under TRAIN law?
The following are exempt from consumption taxes:
1. Sale or importation of
a. agricultural/marine food products in their original
state
b. livestock and poultry used as, or producing foods for
human consumption
c. breeding stock and genetic material
- Sale or importation of
a. fertilizers
b. seeds/seedlings/fingerlings
c. fish/prawn/livestock feeds
d. ingredients used in manufacture of finished feeds
EXCEPT feeds for animals generally considered pets - Importation of personal and household effects which MUST BE EXEMPT FROM CUSTOM DUTIES belonging to:
a. PH residents returning from abroad
b. Non-resident citizens coming to resettle in PH - Importation of professional instruments/tools of trade/occupation, wearing apparel, domestic animals, and other household effects provided that:
a. It belongs to persons coming to settle in the PH
b. In quantities suitable to the profession
c. For own use and NOT for sale/barter/exchange
d. Accompanied by such persons within reasonable
time - Services by agricultural contract growers and milling for others of palay into rice, corn into grits, and sugar cane into raw sugar.
- Medical, dental, hospital, and veterinary services except those rendered by professionals.
7. Educational services rendered by:
A. Private educational institutions accredited by:
a. DepEd
b. CHED
c. TESDA
B. Government Educational Institutions
- Services rendered by individuals pursuant to an employer-employee relationship
- Services rendered by Regional or area HQ
- Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws
- Agricultural cooperative in:
a. Sales to their members
b. Sales to non-members if cooperative is a
PRODUCER (if not, subject to VAT)
c. Importation of direct farm inputs, machineries and
equipment, including spare parts thereof AND must
be USED DIRECTLY AND EXCLUSIVELY IN THE
PRODUCTION OR PROCESSING OF THEIR
PRODUCE. - Gross receipts from LENDING ACTIVITIES by credit or multi-purpose cooperatives
- Sales by non-agricultural, non-electric and non-credit cooperatives provided that the share capital contribution of each member does not exceed 15,000.
- Export sales by persons who are not VAT-registered
- Sale of real properties by non-dealers.
- Sale of real properties by NON-DEALERS
A. Socialized housing
a. Lot: 180,000 and below
b. House and Lot: 450,000 and below
B. Low cost housing: 750,000 and below
C. Residential Lots: 1,500,000 and below
D. Resident House and Lot: 2,500,000 and below, but
beginning 2021, 2,000,000 (Tabag)
E. Adjacent residential lots to 1 buyer: 1,500,000 and
below (Must be from the same seller since seller will be subjected to VAT if applicable) - Lease of a RESIDENTIAL unit with a monthly rental not exceeding 15,000 regardless of the amount of aggregated rentals received by the lessor during the year.
- Sale, importation, printing or publication of books and any newspaper, magazine, review, or bulletin which:
a. appears at regular intervals
b. With fixed prices for subscription for sale
c. Not devoted principally to paid advertisements - Transport of passengers by international carriers doing business in the PH.
- Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment and spare parts thereof for domestic or international transport operations, PROVIDED that the exemption be subject to the requirements of MARINA
- Importation of fuel, goods and supplies by persons engaged in international shipping or air transport PROVIDED THAT:
a. the imports shall be exclusively used in the transport
of goods or passengers from a port in the PH directly
to a foreign port without stopping at any port in the PH
b. Said imports used for other purposes as mentioned
above shall be subject to 12% VAT - Sale or lease of goods and services to senior citizens and persons with disabilities
- Transfer of properties
- Association dues, membership fees, and other assessments and charges collected on a purely reimbursement basis by homeowners’ associations
- Sale of Gold to BSP
- Sale of drugs and medicines prescribed for DIABETES, HIGH CHOLESTEROL, AND HYPERTENSION.
Abdul, an OFW driver from Saudi Arabia, returned to the PH. He brings with him the vehicle he used in his profession to the PH. He is being subject to business tax by the BoC. Abdul argues that BoC is incorrect since the vehicle will be for his profession as a driver. Is Abdul correct?
Abdul is wrong. Vehicles, vessels, aircrafts and machineries and other similar goods for use in manufacture are subject to appropriate duties, taxes, and other charges.
What is an agricultural contract grower?
It refers to those persons producing for others’ poultry, livestock or other agricultural/marine food products in their original state.
T or F
Sales of a cooperatives own produce to its members are exempt from business tax.
True.
T or F
Sales of a cooperatives own produce to non-members are exempt from business tax.
True.
T or F
Sales of a cooperatives to its members OTHER THAN ITS OWN PRODUCE are exempt from business tax.
True.
T or F
Sales to nonmembers of goods other than the cooperatives own produce are exempt from business tax.
False. Subject to VAT.
Davao Farmers Cooperative imported several tractors and spare parts for use in their production. Is this importation subject to business tax, specifically VAT on importation?
No. It is exempt since:
- It is a cooperative
- The imports are to be used in farming and exclusively in production/processing of their produce
Davao Farmers Cooperative imported several tractors and spare parts. The tractors are to be rented out, and the spare parts are for sale. Is this importation subject to business tax, specifically VAT on importation?
Yes, since the purpose of the imported goods are NOT to be used DIRECTLY AND EXCLUSIVELY in the production/processing.
T or F
Importation by non-agricultural, non-electric and noncredit cooperatives of machineries and equipment and spare parts thereof to be used by them are subject to VAT.
True.
In relation to agricultural/marine inputs, what is meant by “original state?”
Original state means unprocessed. However, it is still considered unprocessed even if it has gone through the simple process of preparation, preservation or packaging for the market. The following processes does not change original state of products:
a. Freezing
b. Drying
c. Salting
d. Broiling
e. Roasting
f. Smoking
g. Stripping
Are pesticides/herbicides exempt from business tax considering they are also agricultural inputs?
No, these are not exempt.
Abdul was contracted by Porky Best, a distributor of pork products, to raise hogs. Abdul will be compensated for the undertaking.
a. Is there business tax applicable for Abdul?
b. Is Porky best liable for business taxes on its sale?
a. No, since Abdul is considered an agricultural contract grower and therefore exempt from business tax.
b. It depends on what products Porky best will sell. For example, if Porky Best will sell the pork in its original state, it will be exempt. However, if it sells the pork products marinated (considered state altering), it will be subject to business tax.
T or F
Sales of drugs and medicines by pharmacies inside hospitals are not subject to business tax.
False. It is subject to business tax, SPECIFICALLY VAT.
T or F
Laboratory services of hospitals are exempt from business tax.
True.
