Professional Documents
Culture Documents
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Standard Input VAT of 7% on sales to Government
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Final Withholding VAT of 5% (Final VAT due)
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to be recognized as cost or expense
Note: Government agencies, before making payment on account of each purchase, shall deduct final withholding VAT of 5% of the gross payment (Government
Money Payments- GMP).
5% final withholding VAT shall represent the net VAT Payable of the Seller.
The remaining 7% effectively accounts for the standard input VAT.
Actual Input VAT > Standard Input VAT (7%) = Unrecoverable Input VAT (which may be recognized as cost or expense)
Actual Input VAT < Standard Input VAT (7%) = difference must be closed to expense or cost
12% final withholding VAT applies to transactions involving lease or use of property rights owned by non-residents and other services
rendered in the Philippines by non-residents.