chapter 2 Flashcards
is described as the trade or commercial activities which are “regularly engaged in” as a means of livelihood or with a viewpoint of obtaining profit.
The sales of goods or services related to trade, profession or business in the Philippines are generally subject to business taxes, except when exempted as provided by law.
BUSINESS
FUNDAMENTAL CONSIDERATIONS: Accordingly, an economic activity is subject to business taxes if the following basic conditions are met.
*It is related to trade, profession or business;
*It is occurred within the Philippines; and
*It is not exempted by law from business tax.
TAXABLE BUSINESS TRANSACTIONS ARE GENERALLY CHARACTERIZED AS FOLLOWS:
*Regular Transactions
*Incidental Transactions
*Transactions for profit or for not-for-profit
*Transactions consummated within the Philippines; and
*Lawful Transactions
The _______ generally determines whether an economic transaction is subject to business tax.
rule of regularity
A business is generally characterized as performing habitual, systematic, continuous, and regular income generating activities such as selling goods or services to customers or clients.
basa
Sale of shares of stock through stock exchange is subject to ½ of 1% of other percentage tax (OPT) based on the selling price or gross monetary value in money.
basa
Importation on goods/services (in general), whether for business or not, is subject to ____
12% VAT.
Overseas dispatch, communication originating from the Philippines is subject to
10% OPT
Horse race winning is subject to 10% OPT, also jai-alai is subject to
30% OPT
Exceptions to the “rule of regularity”:
*Sales of services by a nonresident foreign person
*Sales of goods by nonresident foreign person
is a phrase to describe the regular conduct or pursuit of commercial or economic activity, including transactions incidental thereto, to achieve the purpose for which the business is created.
In The Course of Trade or Business
are only accompanying transactions but not the major part of business activities
Incidental Transactions
Sales of scrap materials
Sale of ordinary assets used in the business other than inventory; and
Transactions deemed sales
Some incidental transaction subject to business taxes are:
Sale of _____ of the enterprise of recyclable materials left over from product manufacturing and consumptions, such as parts of vehicles, building supplies, surplus materials, plastic, bottle, paper and the like, is subject to business tax.
Sale of Scrap Materials
_______ are subject to business tax. The sale of company cars to its officers is now subject to VAT being incident to the pursuit of its commercial or economic activity.
Sale of Ordinary Asset other than Inventory
Business tax imposed on transactions involving the use or the consumption of goods or services. The imposition of business tax follows the ________.
consumption/destination principle
The place of sale is presumed to be the place of ______.
consumption
For Philippine taxation purposes, sales that are not consummated in the Philippines are not subject to business tax. They are either subject to 0% VAT, VAT Exempt or OPT-Exempt.
basa
provides that no business tax shall be imposed on sales of products or services for consumption outside of the territorial border or the taxing authority.
Doctrine of Cross Border
*Sale of goods or services outside the Philippines
*Marginal Income Earner (do not realized gross sales or receipts exceeding P100,000 in any 12-month period)
*Exempt commercial transactions
* Privilege stores (tiangge etc)
The following economic activities are NOT subject to business tax in the Philippines:
business registration
*taxpayer’s name, residence, business, the place where such business is carried on, TIN, and other information required
-registration fee
- branch
-warehouse
-facility
It is a basic requirement in the conduct of business. This document is issued by the BIR to the taxpayers granted to engage into business.
This document is used to be posted together with its validated Registration Form Return (BIR Form 0605) at a conspicuous place of business to avoid penalties and fine.
BIR Certificate of Registration (COR)
*Individual earning purely compensation income;
*Overseas workers
*Cooperatives
*Marginal income earners – self employed individuals where gross sales or receipts do not exceed P250,000 per year
Exempt from Registration Fee:
Classification of business transactions:
Vatable transactions
Transactions subject to Regular 12% VAT
Allowed with Input VAT
NOT allowed with Input VAT
Zero rated VAT Transactions – transaction subject to 0% VAT
Exempt Transactions – Transaction that are both exempt from VAT and OPT
Subject to OPT Transactions
Mixed Transactions
Transaction with the Government Units
basa
