VAT and OPT

Question 1

by definition VAT is imposed on the following transactions:

Answer 1

1. sale, barter, or exchange of goods or properties
2. lease of goods or properties
3. sale or rendition of services in the course of trade or businesses
4. importation of goods whether or not in the course of trade or business

Question 2

in the course of trade or business means

Answer 2

the business transaction or series of transactions must be coupled with regularity or habituality
1. as opposed to a remote transaction
2. NOT for personal consumption

Question 3

importations that are purely for personal consumption or use are subject to

Answer 3

customs duties and VAT

Question 4

VAT is an

Answer 4

indirect tax, a national tax, and a proportional tax

Question 5

A proportional tax is

Answer 5

a type of tax where the tax rate remains the same regardless of the amount being taxed. For example, a 10% sales tax means everyone pays 10% tax on whatever they purchase.

Question 6

A progressive tax is

Answer 6

a tax where the tax rate increases as the amount subject to taxation increases. Higher income or wealth levels are taxed at a higher rate than lower levels.

Question 7

Input VAT is the VAT component

Answer 7

in every purchase of goods by a VAT-registered entity to another VAT-registered entity

Question 8

Output VAT is the VAT component

Answer 8

in every sale of goods by a VAT registered entity regardless if the sale is made to a VAT registered entity or not

Question 9

PISO

Answer 9

PI (PURCHASE - INPUT), SO (SALE - OUTPUT)

Question 10

VAT taxable transaction may be subject to a rate of

Answer 10

12% or 0%

Question 11

Who would be required to register in the VAT system?

Answer 11

any person engaged in business whose annual gross sales for the past 12 months exceed 3 million pesos or have reasonable grounds to believe that his gross sales for the next 12 months shall exceed 3 million pesos

Question 12

Certificate of Registration:

Answer 12

registers name, registered address, tax identification number, different type of taxes required to file and pay

Question 13

still deemed sale, despite no actual sale took place, and is subject to VAT (1)

Answer 13

transfer, use or consumption, not in the course of trade or business of goods or properties originally intended for sale or for use in the course of business

Question 14

still deemed sale, despite no actual sale took place, and is subject to VAT (2)

Answer 14

distribution, or transfer of goods to:
shareholders or investors as share in the profits of the VAT registered;

Question 15

still deemed sale, despite no actual sale took place, and is subject to VAT (3)

Answer 15

consignment of goods if actual sale is not made within 60 days following the date such goods were consigned and not returned by the consignee to the VAT-registered consignor

Question 16

still deemed sale, despite no actual sale took place, and is subject to VAT (4)

Answer 16

retirement from or cessation from business with respect to all goods on hand
1. change of ownership
2. dissolution of a partnership and creation a new partnership
3. change from sole proprietorship to a corporation (as if the goods were sold from the sole proprietorship to a corporation, an exchange of goods between hands)

Question 17

How to compute for VAT payable?

Answer 17

1. output vat = 120,000 (amount remitted to the BIR)
2. LESS input vat = (80,000)
3. VAT Payable = 40,000

Question 18

if input > output vat,

Answer 18

VAT payable, it will be called VAT refundable/creditable which can be used for the succeeding term

Question 19

one distinction between zero-rated and VAT exempt transaction is that

Answer 19

the prior may avail of input tax credit or refund from VAT purchases

Question 20

the broad examples of zero-rated sale transactions

Answer 20

export sales, foreign currency denominated sale and effectively zero-rated sales

Question 21

if not VAT then it will be subject to

Answer 21

3% OPT for business

Question 22

OPT - crediting system

Answer 22

NO crediting system similar to VAT, the crediting system is unique to VAT

Question 23

3% OPT is

Answer 23

ALSO AN INDIRECT TAX - it can be shifted to the consumers

an excise/privilege tax and a proportionate tax

Question 24

VAT-registered persons subjected to 0% rate

Answer 24

1. Export sale; or
2. Sales to persons or entities whose exemption under special laws, or international agreements to which the Philippines is a signatory (effectively-zero rated sales)

Question 25

What is VAT-exempt transactions

Answer 25

refer to the sale of goods or properties and/or services and the use or lease of properties that are not subject to VAT (output tax), and the seller is not allowed any tax credit of VAT (input tax) on purchases.

Question 26

A VAT-registered person shall issue:

Answer 26

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

Question 27

Percentage taxes are based on

Answer 27

business taxes based on gross sales or receipts.

Question 28

Generally, if a taxpayer is exempt from VAT, he or she is liable

Answer 28

for 3% percentage tax.

Question 29

Who are people exempt from VAT?

Answer 29

persons who annual sales/receipts do not exceed 3,000,000

Question 30

common carrier

Answer 30

persons, corporations, firms, or associations engaged in the business of carrying or transporting passengers or goods or both by land, water, or air for compensation, offering their services to the public and shall include transportation contractors

Question 31

what is the tax base in transaction deemed sale?

Answer 31

For 1, 2, 3, it shall be based on selling price unless the selling price is unreasonably lower than the market value of the goods (more than 30%), the CIR or his representative will determine the tax base

(1) Transfer, use, or consumption not in the course of trade or business
(2) distribution or transfer of goods to shareholders
(3) consignment of goods if actual sale is not made within 60 days

in case of retirement or cessation of business the tax base shall be the acquisition cost or the current market price of the goods whichever is lower

Question 32

zero-rated sale of goods or properties by a VAT-registered person is a

Answer 32

taxable transaction for VAT purposes, but the sale does not result in any amount of output tax because the rate is zero

Question 33

What is a foreign currency denominated sale (FCDS)

Answer 33

a sale of goods to a non-resident except those mention in sections 149 (excise tax on automobiles) and 150 (excise tax on non-essential goods), assembled or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable foreign currency and account for in accordance with the rules and regulations of the BSP

Question 34

Effectively-zero rated transaction

Answer 34

1. Refers to the local sale of goods and properties by a VAT registered person to a person or entity who was grated indirect tax exemption under special law or international agreement
2. Since the buyer is exempt from indirect tax, the seller cannot pass on the VAT and therefore, the exemption enjoyed the buyer shall extend to the seller, making the sale effectively zero-rated

Question 35

a special kind of OPT imposed in the gross revenue of various amusement activties

Answer 35

Amusement Tax

Question 36

Jai alai and race tracks

Answer 36

30%

Question 37

Cabarets, night and day clubs

Answer 37

18%

Question 38

Cockpits

Answer 38

18%

Question 39

Professional Basketball games

Answer 39

15%

Question 40

Boxing exhibitions

Answer 40

10%

Question 41

Boxing exhibitions in any division whether for world or oriental
championships is exempt from amusement tax if the following
conditions exist:

Answer 41

One of the contenders for the said championship is a citizen of the
Philippines;
The promoter is a Filipino citizen or a corporation at least 60% owned
by Filipino citizen/s

Question 42

in the initial public offering or IPO of newly publicly listed corporation, what is also imposed

Answer 42

OPT is also imposed

Question 43

Up to 25%
Over 25% but not over 33 and 1/3
Over 33 and 1/3%

Answer 43

4%
2%
1%

Question 44

Percent of IPO to O/S - Tax Rate

Answer 44

The tax shall be based on the higher amount of gross selling price or gross value in money of the shares of stock sold, bartered or exchanged. It shall be paid by the issuing corporation in primary offering within 30 days from the date of listing or by the seller within 5 days from the date of collection in secondary offering.

Question 45

OPT for sale of shares of stock listed and traded in the local stock exchange

Answer 45

is 6/10 of 1% of the gross selling price or gross value in money of the shares sold, bartered or exchanged

Question 46

OPT for horse race winnings is

Answer 46

10% for the owner of the winning horse and this amount shall be withheld before paying the winnings to the owner

Question 47

For bettors, the OPT for horse race winnings is

Answer 47

10% on the amount of winnings after deducting the cost of the ticket

Question 48

The “value” contemplated in Value added tax

Answer 48

is the value being added to a product as it transfers from one entity to another