Professional Documents
Culture Documents
Presented by: MS. SHEILA JOY C. BENEDICTO, CPA, MBA Revenue Officer II RDO 132 East, Davao City
VAT defined
It is a tax on the value added to the purchase price or cost in the sale or lease of goods, properties, or services in the course of trade or business.
VAT defined
It is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services.
Background of VAT
Background of VAT
5. RA 9337 New Expanded VAT Law
signed into law on May 24, 2005 Implementation withheld due to TRO TRO was lifted by the SC on Oct. 18, 2005 Became effective November 1, 2005 Implementing Rules and Regulations
RR 14-2005 was superseded by RR 16-2006 (amended by RR 2-2007, RR 4-2007, RR 10-2011 & RR 16-2011)
Objectives of VAT
Broaden
Tax Base
Provide
Simplify
SELLER
provided the aggregate sales/receipts exceeds the threshold* (or who opt to register as VAT)
IMPORTER
VAT Rates:
10%
12% 0%
TRANSACTIONS COVERED
Sale or Exchange of Goods / Properties Importation Sales or Exchange of Services Transaction Deemed Sales Zero-Rated Sales of Goods / Properties / Services Effectively Zero-Rated Transactions
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excluding VAT.
the excise tax, if any shall form part of the gross selling price
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If based on VALUE
TOTAL VALUE used by the BOC in determining:
Tariff and custom duties plus custom duties, excise taxes, if any and Other charges paid by the importer (prior to ATRIG)
the contract price compensation, service fee, rental or royalty, including the amount charged for materials supplied with the services and deposits applied as payments for services rendered and advance payments actually or constructively received
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withdrawal of goods for personal use must be made - For distribution to shareholders and creditors invoice shall be prepared at the time of the occurrence of the transaction recorded in the subsidiary journal
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Note: If business is to be continued by new owner, the entire amount of output tax shall be allowed as input tax
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Output Tax
Means the value-added tax due on the sale or lease of taxable good or property or services by a VAT-registered person. VAT Rates
12% 0%
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Input Tax
It is evidenced by a VAT invoice or official receipt shall be creditable against the output tax. Input tax on domestic or importation of goods. Input tax that can be directly attributed A ratable portion of the input tax which cannot be directly attributed to either activity
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For sale; or For conversion into or intended to form part of a finished product for sale including packaging materials; or For use as supplies in the course of business; or
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Purchase of real properties for which the VAT was actually paid Purchase of services for which the VAT was actually paid Transitional input tax Presumptive Input tax Standard Input Tax (govt. transaction)
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If capital good is sold within 5 years or prior to exhaustion from input VAT thereon, the entire unamortized input tax on the capital goods sold can be claimed as input tax credit during the month/quarter when the sale was made.
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Option to apply for refund/tax credit certificate of capital goods has been withdrawn.
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VAT Payable
Output Tax ( Sales x 12%) Less Input Tax (Purchases x 12%) VAT payable P xxx xxx P xxx
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27,500 3,300
P30,800
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32,500 3,900
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Journal Entries
3.
600.00
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VAT Payable
Output Tax Less Input Tax VAT Payable P 3,900.00 3,300.00 P 600.00
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Any VAT registered person whose sales are ZERO-RATED or EFFECTIVELY ZERO-RATED may, within two (2) years after the close if the taxable QUARTER when the sales was made, apply for the issuance of a TCC.
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Person whose registration has been cancelled due to retirement or cessation of business or due to change in or cessation of status may, within two (2) years from the date of cancellation, apply for the issuance of a TCC.
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If actual input VAT is less than 7% of gross payments, the difference must be treated as income of the seller.
The income received from the government while subject to final withholding on VAT shall still be reported in the VAT return
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tax that cannot be directly attributed to either VATable or exempt transaction shall be pro-rated and only the ratable portion can be allowed as tax credit
tax attributable to VAT exempt transaction shall not be allowed as tax credit but should be treated as part of cost or expense
tax attributable to the zero-rated sales may be refunded or applied for tax credit certificate
Input
=
=
Creditable *
Input Tax
Refundable
X Input Tax
Expense or cost
COMPLIANCE REQUIREMENTS
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Optional Registration
1. Any person who is VAT-exempt under Sec. 4.109-1 (B)(1)(V) may elect to be VAT registered; 2. Any person who is VAT-registered but enters into transactions which are exempt from VAT (mixed transactions) may opt that the VAT apply to his exempt transactions; Any person who elects to register shall not be entitled to cancel registration for the next 3 years.
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Optional Registration
3. Franchise grantees of radio and/or television broadcasting with annual gross receipts not exceeding P10M. (This option once exercised is irrevocable);
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Invoicing Requirements
A VAT-registered person shall issue: For every sale, barter or exchange of goods or properties - VAT invoices For every sale, barter or exchange of services or lease of goods or properties - VAT official receipts
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Cont
The word VAT EXEMPT SALE written or printed prominently if sale is VAT-exempt; The words ZERO-RATED SALE written or printed prominently if sale is subject to zero percent
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Cont
Option to issue combined or separate invoices/receipts of sale in a combination of VAT-liable and VAT-exempt sale. If the sale is combined, the invoice or receipt should indicate the break-down of the sale price between the taxable and the exempt component and the calculation of the VAT
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Cont
For sale to VAT-registered persons amounting to P1,000 or more, indicate the name, business style (if any), address and TIN of the purchaser
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Accounting Requirements
All persons subject to VAT shall in addition to regular accounting records, maintain the following SUBSIDIARY SALES JOURNAL which the daily sales are recorded. It includes columns for date of sale; name of customer; TIN of customer, Sales Invoice/OR number, exempt sales; VAT sales (12%) government sales and Zero-Rated Sales;
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Accounting Requirements
SUBSIDIARY PURCHASE JOURNAL which the daily purchases are recorded. It includes columns for date of purchase; name of supplier; TIN of Supplier, purchase invoice number, exempt purchases; domestic purchases (capital goods and other than capital goods), purchases from importation and purchases from services.
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- 50% surcharge on the VAT due - If the invoice/official receipt contains the required information, purchaser shall be allowed to recognize an input tax credit
2. VAT-registered person who issues a VAT invoice/official receipt for a VAT-exempt sale without the words VAT-EXEMPT SALE
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Filing of Return
Every persons liable to pay the VAT shall file a: MONTHLY RETURN (2550M) every 20th day of the month following the close of each month; and QUARTERLY RETURN (2550Q) every 25th day following the close of each taxable quarter. Any person, whose registration has been CANCELLED within 25 days from the date of cancellation of registration Only one consolidated return shall be filed by the taxpayer for his principal place of business or head office and all branches.
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Synchronized Filing of Quarterly VAT and Quarterly Income Tax (RR 8-2002)
Ex: Fiscal year ends May 31 Under Manual Filing System Due Date For Filing/Payment
July 20 August 20 September 25 October 20 November 20 December 25 January 20 February 20 March 25 April 20 May 20 June 25
Quarter Covered
Months
June
Forms to Used
2550M 2550M 2550Q 2550M 2550M 2550Q 2550M 2550M 2550Q 2550M 2550M 2550Q
ePayment
Jul. 25 Aug..25 Sept. 25 Oct. 25 Nov. 25 Dec. 25 Jan. 25 Feb. 25 Mar. 25 Apr. 25 May 25 June 25
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1st
Quarter
2nd Quarter
3rd
Quarter
4th
Quarter
April May
A B C D E
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Submission of SLS/SLP
Persons required to submit:
Summary List of Sales all VAT taxpayers Summary List of Purchases all VAT taxpayers
Note: Effective Jan. 1, 2012 (regardless of the amount of sales and purchases) all VAT registered TPs are required to submit SLS/P under RR 1-2012
Due Date: On or before the 25th day of the month following the close of the taxable quarter.
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Submission of SLS/SLP
Ref: RMO 56-2010 / RMC 60-2010 Electronic submission Thru efps Manually Use of removable storage media 3.5 inch floppy diskette USB flash drive CD DVD
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Sale of Residential Lot Sec. 109(P) Sale of Residential House & Lot Sec. 109(P) Lease of residential units Sec. 109(Q) Sale or lease of goods or properties or the performance of services Sec. 109(V)
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APPLICATION
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Output tax
Sales
Sales to Private Sales to Gov't. Sales - Non VAT total sales 42,900,000 15,000,000 500,000 58,400,000 6,948,000
output tax
5,148,000 1,800,000
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Determine the following input taxes assuming all VAT taxable purchases were duly supported with VAT Invoices/ORs:
On purchase of goods directly attributable to government transactions; On purchase of capital goods On purchase of goods other than capital goods On purchase of services
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Input Tax directly attributable to gov't. sales Purchases 13,000,000.00 12% 1,560,000.00
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IT on Capital Goods
Total Input Tax on Capital Goods to be spread over Allowable monthly credit (P300,000 / 60 mos) 2,500,000.00 300,000.00 5,000.00
Input tax on Depreciable goods - prior year 180,000.00 Input tax on Depreciable goods - current year 60,000.00 Total 240,000.00 (Assumption: Above equipments are intended for a branch without sale to government)
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Input Tax
5,871,660
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IT on purchase of services
Freight In
Professional Fees Light Programming services Communication Rent Expense Security Services - agency fee Repairs and Maintenance Transportation Representation Advertisement Insurance
500,000
500,000 450,000 500,000 180,000 334,500 70,000 175,000 211,000 350,000 120,000 50,000
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Lets apply:
Apportion the input tax on mixed transaction
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On Purchases - gov't transaction (13M x 12%) 1,560,000.00 Apportioned Input Tax 200,974.32 Total 1,760,974.32 Less: Standard Input Tax 1,050,000.00 Input Tax on Sale to Gov't. Closed to710,974.32 Expense
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Cash 15,900,000.00 Withholding Tax on VAT (5%) 750,000.00 Expanded Withholding Tax (1%) 150,000.00 Sales 15,000,000.00 Output Tax 1,800,000.00 To record sale to government.
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Input Tax on Purchases - gov't transaction Add: Allocated Input tax on gov't. transaction Total Input Tax Available Less: Standard Input Tax Closed to Expense/Cost
6,699.14
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FORM 2550Q
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Men love their country, not because it is great, but because it is their own. ~Seneca
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The End
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