Intro to BusTax + Exclusion, Zero-Rated VAT Flashcards
VAT threshold
3 million gross sales, except for grantees of TV/radio franchise which requires 10 million gross sales
Does the threshold include VAT exempt sales?
No, it does not include VAT exempt sales
When is a taxpayer required to register as VAT
- Exceeds the VAT threshold in the previous 12 months
- Is expected to break the VAT threshold in the next 12 months
When a taxpayer voluntarily registered for VAT, for how long is the register irrevocable?
It has a lock in period of 3 years, except for TV/radio franchisees where their registration is perpetually irrevocable
What are the characteristics of VAT
- Indirect Tax
- Tax on consumption
- Imposed at each stage of production and distribution process
- Credit-invoice method tax
Domestic sale of goods and services, lease of properties, that is expected to be consumed within the Philippines
VATable sales
Domestic sale of goods and services, or lease of properties, that is expected to be consumed outside of the Philippines, or is specifically to be taxed at 0% by the tax code
Zero-Rated Sales
Sale of goods and services that are specifically exempted by the Tax Code
Exempt Sales
When a transaction is exempt from VAT it is also
exempt from business tax in general, unless a specific percentage tax applies
When a domestic carrier provided local transportation services to passengers, such services is
exempt from VAT, but is subject to 3% (common carriers tax) under the Tax code
What are the VAT exempt transactions related to agriculture
- Sale or importation of agricultural and marine food products in its original state
- Sale or importation of seeds, fertilizers, seedlings, fingerling, and feeds (for fish, prawn, livestock and poultry)
- Services provided by agricultural contract growers and millings for others of palay into rice, corn into grits, and sugarcane into raw sugar
Are sale of marinated fish exempt for VAT purposes?
No, but other simple process of preparation and preservation are still deemed in its original state
Raw sugar that is exempt from VAT refers to
Muscovado sugar. Refined sugar is still subject to 12% VAT
Are specialty feeds exempt from VAT?
No, they are still subject to VAT
(T or F) Polished and/or husked rice, corn grits, raw cane sugar and molasses, ordinary salt and copra is considered in their original state?
True
VAT Exempt transactions related to Health Goods and Services
- Medical, dental, hospital, veterinary services, except rendered by those professionals
- Sale or importation of prescription drugs and medicine for diabetes, cholesterol, hypertension, cancer, mental illness, kidney diseases
VAT Exempt Transactions related to educational goods and services
- Educational services rendered by accredited private educational institutions (accredited by DepED, CHED, or TESDA)
- Sale or importation of books and other educational reading materials, including those in digital or electronic format
VAT Exempt Transactions related to Real properties and housing
- Sale of real properties
- Lease of residential units with monthly rental not exceeding 15,000
Requisites for Real Properties to be VAT exempt
- Classified as capital assets
- Utilized for socialized housing
- House and lot and other residential dwelling not exceeding 3.6 million
Lease of commercial units will be subject to
12% VAT regardless of monthly rentals
Lease of residential units with monthly rentals exceeding 15k is subject to
VAT or percentage tax
Is the sale of parking lot vat exempt?
No, but the sale of condominium if not exceeding the VAT threshold is exempt
VAT exempt transactions related to cooperatives
- Sale of “agricultural “cooperatives own produce processed or at its original state and other produce still in its original state sold to its members only
- Gross sales of lending activities by “credit or multi-purpose cooperatives” registered with CDA, provided exemption only from lending activities
- Sales by non-agricultural, non-electric, and non-credit coops provided that the share capital contribution of each member does not exceed 15k pesos
Exempt transactions regarding vessels and aircraft
- Transport of passengers by ‘international’ carriers doing business in the Philippines
- Sale, importation or lease of passenger or cargo vessels and aircraft, including engine, equipment, spare parts thereof for domestic or international transport operations, provided, that thee exemption on the vat shall be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program
VAT exempt transactions regarding importation
- Importation of personal and household effects belonging to:
a. The residents of the Philippines returning from abroad; and
b. NRA citizens coming to resettle in the PH
Provided, that such goods are exempt from customs duties under the Tariffs and Customs Code of the PH - Importation of professional instruments and implements, tools of trade, occupation or employment, wearing apparel, domestic animals, and persona and household effects belonging to persons coming to settle in the PH
VAT exempt transactions regarding international shipping or air transport
- Importation of fuel, goods and supplies provided that the fuel, goods, and supplies shall be used for international shipping or air transport operations. If any portion is used for any other purposes, the portion shall be subject to 12% VAT
Other VAT exempt transactions
- Services subject to percentage tax
- Services rendered by individuals pursuant to an employer-employee relationship
- Services render by RHQs established in the PH by multinational corps that do not derive income from the PH
- Transactions which are exempt under international agreements
- Export sales by persons who are not vat registered (If vat registered zero-rated)
- Services of banks and financial intermediaries
- Sale or lease of goods and services to senior citizens and PWDs
- Transfer of property pursuant to Section 40
- Association dues, membership fees, and other assessment collected on a purely reimbursement basis by HOA
- Sale of gold to BSP
- Sale or lease of goods or properties or performance of services other than the transactions mentioned in the code that the gross annual sales do not exceed Php3M
Zero-Rated Sales
- Export Sales of goods and properties
- Export Services
- sales to bonded manufacturing warehouses of export-oriented enterprises
- Sales of goods and services subject to zero percent VAT under special laws have been added to the enumeration of
VAT zero-rated sales - Sales of goods and services to export-oriented enterprises with export sales of at least 70% of total annual production of
the preceding taxable year
