VAT Flashcards
VALUE ADDED TAX
- seller is liable to pay income tax + VAT
- proportional (fixed rate)
- indirect (passed on)
Yes
VAT REGISTRATION
- can be mandatory or optional
Who are mandatorily required to register as VAT?
If those who are required to register did not register, they cannot claim input VAT.
Mandatory
- Gross Sales > 3M → past OR next 12 months
- Gross Sales > 10M → Radio and TV
Doon sa 3M
- hindi lang past gross sales yung pagbbase-an, pwede rin na if sa next 12 months mag 3M yung gross sales → mandatory registration
If I am not required to register, but I opted to, I can change my status after 2 years. True or False?
Assuming I am a radio and TV company
If I am not required to register, but I opted to, I can change my status after 2 years. True or False?
- False (3 year lock-in period)
- False (irrevocable)
Output VAT less Input VAT
= VAT Payable
Yes
If the term is…
- invoice / bill
- payment / collection
VAT inclusive or VAT exclusive?
VAT Inclusive
Terms to use for VAT Exclusive
- selling price
- fair value
- from the books
I am regularly conducting a business. Am I liable for output VAT?
I have isolated transactions. Am I liable for output VAT?
- Yes (including incidental transactions)
- No (since “business” tax)
NOTE : For importation, even if not connected to business (brainy yung gov’t, since output VAT)
Sources of Output VAT
1. Sale of Goods and Services
2. Sale of Real Property
3. Deemed Sale Transactions
4. Zero-Rated Sales (export)
Yes
Sale of Goods and Services
- what is the base?
- what is the timing?
Base
- Gross Selling Price
- Gross Sales less Sales DRA plus Excise Tax
- Discount → must not be dependent upon future event
Timing
- month of sale
Sale of Real Property
- what is the base?
- what is the timing?
Base
- higher of SP or FMV
Timing
- month of sale or installment method (!!)
Real Property (Capital Asset) → cannot be subject to VAT (business tax nga e)
Deemed Sale Transactions
- what is the base?
- what is the timing?
Base
- FMV
Timing
- month deemed sold
Examples of Deemed Sale Transactions (OCDR)
- Originally intended for sale or for use in business
- Consignment (not made within 60 days)
- Distibution or transfer of property (property dividend and dacion en pago)
- Retirement of business or VAT status (XPN : merger and consolidation)
Yes
Zero Rated Sales (SEND RIT)
to Separate customs territory
Export sales (irrespective of shipping arrangements)
to Non residents (in acceptable FC)
Domestic carriers (from PH → FC)
Renewable energy (only for generation)
to International carriers (need not be in FC)
to tax exempt by Treaties (need not be in FC)
Zero Rated and Exempt
- both have no output VAT
What is the difference between them?
Input VAT
- zero rated → creditable
- exempt → expense
Requisites of Input VAT
- buyer must be VAT registered. True or False?
- what is purchased is connected to business. True or False?
- evidenced by VAT invoice. True or False?
- False (both buyer and seller must be registered)
- True - For importation, must also be connected to business (different to output VAT, cause input VAT will ↓ VAT payable)
- True
It is considered importation once it is removed from the BOC. Importer has to pay some amounts before it’s removal
- VAT
- Excise Tax
- Customs Duties
- Other expenses
Think of it like inventory in PAS 2
Sources of Input VAT
1. Purchase of Goods and Services
2. Purchase of Capital Goods
3. Importation
4. Presumptive Input VAT
5. Transitional Input VAT
Yes
Purchase of Goods and Services
- what is the timing?
month of purchase
Purchase of Capital Goods
- first, determine MAAC (monthly aggregate acquisition cost)
- if MAAC is 1M, it must be claimed as input VAT outrigh in the month purchase. True or False?
- if MAAC is more than 1M, input VAT (per item) must be deferred then amortized over 90 months or useful life, whichever is longer. True or False?
MAAC → exclusive of VAT
- True → 1M and below = outright
- False → more than 1M = over 60 months, whichever is shorter
Shorter kasi if longer, mas tatagal yung duration na may pambawas ka sa output VAT, which is ayaw ng BIR (gusto nila ASAP, makakolekta sila)
Beginning January 1, 2022 → outright na lagi
Importation
- what is the base?
Landed Cost (DUTI CEO)
- Dutiable Value (CIF)
- Customs Duties
- Excise Tax
- Other legal charges
(ignore facilitation fee and from BOC to warehouse)
Presumptive Input VAT
- because since they buy from exempt, they cannot avail of the regular 12% input VAT
- available to retailers of SAMAMICOPARE. True or False? What is SAMAMICOPARE?
False - available to processors or manufacturers (✗ retailer)
- Sardines
- Mackerel
- Milk
- Cooking Oil
- Packed Noodles
- Refined Sugar
How to solve presumptive input VAT?
Primary Agricultural Purchases
x 4%
purchases, not inventory
Transitional Input VAT
- available to those who are from non VAT to VAT
- how to solve?
Inventory, Beg from VAT suppliers (net of VAT)
Add : Inventory, Beg from Non VAT suppliers
TOTAL
x 2%
Choose the value vs actual VAT paid (whichever is higher)
Input VAT (pambawas) siya so aakalain mo na whichever is lower, however kaya higher is ineencourage nila na mag transition to VAT (transitional input VAT)
5% Creditable Withholding VAT
- if the sale to government is P100, what is the journal entry?
Dr. Cash 107
Dr. Creditable VAT 5
Cr. Sales 100
Cr. Output VAT 12
7% output VAT - will be received
5% output VAT - will be creditable (withheld)
VAT Exempt Transactions
- Importation
- Agricultural
- Cooperatives and Corporation
- People
- Carriers and Transport Operations
- Necessity
- Residential
- Other
Yes
VAT Exempt Transactions
Importation
- professional tools / implements (own use, not for sale)
- personal household effects
Per item, what are some facts to be considered exempt?
from abroad magssettle sa PH
VAT Exempt Transactions
Agricultural
- Agricultural or Marine Products (original state)
- Fertilizers, Livestock, Poultry Feeds
- Agricultural Contact Grower and Millers
Per item, what are some facts to be considered exempt?
Agricultural or Marine Products (original state)
- preparation → broiling, roasting, stripping
- preservation → salting, drying, freezing, smoking
- packaging → shrink wrapping, tetra packing
- polished / husked risk, molasses → original state
Fertilizers…
- including ingredients
- XPN : Specialty Feeds (cocks, pets, zoo)
VAT Exempt Transactions
Cooperatives and Corporations
- Credit Cooperatives
- Agricultural Cooperatives
- Nons Cooperatives
- RAHQ
- Bank and Other Non Bank
Per item, what are some facts to be considered exempt?
Credit Cooperatives
- from lending activities
- both to members and non members
Agricultural Cooperatives
- from own produce
- both to members and non members
Non Cooperatives
- max of 15K capital contribution each member
VAT Exempt Transactions
People
- PWDs
- Employer-Employee Relationship
- Senior Citizen
- Solo Parents
Per item, what are some facts to be considered exempt?
PWDs
- necessities such as food and medicine
Senior Citizens
- necessities such as food and medicine
Solo Parents
- until 6 years old
- income → less than 250K annually
VAT Exempt Transactions
Carriers and Transport Operations
- Fuel, Goods, Supplies
- Vessels and Aircrafts
- Passengers
Per item, what are some facts to be considered exempt?
Fuel, Goods, Supplies
- international transport operations
Vessel and Aircrafts
- including engine, equipment, spare parts
- domestic or international transport operations
Passengers
- international carriers
VAT Exempt Transactions
Necessity
- Hospital Services
- Educational Services
- Books, Newspapers, Bulletins, Magazines
- Prescribed Drugs and Medicines
Per item, what are some facts to be considered exempt?
Hospital Services
- rendered by professional → vatable (e.g. clinic)
- outpatient → vatable
- inpatient → exempt
- laboratory → exempt
Educational Services
- private and non profit (under DEPED, CHED, TESDA)
- government
Books…
- for paid advertisements → vatable
- CREATE → includes electronic format
Prescribed Drugs…
- Diabetes, Cholesterol. Hypertension → Jan 1 2020
- Cancel, Mental Illness, TB, Kidney → Jan 1 2021
VAT Exempt Transactions
Residential
- Lease of Residential Units
- Association Dues and Membership Fee (no profits)
- Real Properties
Per item, what are some facts to be considered exempt?
Lease of Residential Unit
- max of 15K monthly rental per unit (regardless of 3M threshold)
- more than 15K monthly rental per unit (think of 3M threshold)
Association Dues…
- by homeowner association and condominiums
Real Properties
- not held for sale (if still used in business → VAT)
- socialized housing
- residential lot and parking lot → vatable
- residential house and lot → exempt (max of 3,199,200 per unit)
VAT Exempt Transactions
Other
- 3M threshold
- Percentage Tax
- International Agreements
- Export Sales of Not VAT Registered
- Gold to BSP
Per item, what are some facts to be considered exempt?
3M threshold
- exemptions prevail even if more than the threshold (e.g. prescribed drugs → kahit more than 3M, exempt kasi stated na nga sa batas na exempt e)
