Professional Documents
Culture Documents
CHAPTER 8
OUTPUT VAT - ZERO-RATED
SALES
Zero-rating
Output VAT
No output VAT
No output VAT
Input Vat
Treatment
Deductible against
gross income
Creditable or
refundable
Extent of tax
relief
Partial
Total
CHAPTER 8
OUTPUT VAT - ZERO-RATED
SALES
Rizal Corporation shall compute its taxable income and income tax
due as follows:
Sales
P 510 000
Less: Cost of goods sold, exclusive of VAT
350,000
Gross income
P 160 000
Less: Deductions
10,000
Taxable income
P 150, 000
Multiply by Corporate income tax rate
30%
Income tax due
45,000
ZERO-RATED SALES
Zero-rated sales are foreign consumptions
such as export sales and other sales to nonresidents including transactions that are granted
with a zero-rating status by special law or by
international agreement to which the Philippines
is a signatory.
1. Export sales
2. Foreign currency denominated
sales
3. Sales to tax-exempt persons or
entities under special laws or
international agreements
EXPORT SALES -
SALES T0 NON-RESIDENTS
lllustration 1
Export destination
Export for
Hongkong
Terms
FOB destination
Payment
$ 100,000
FOB destination
P 450,000
Export to Japan
800,000
Guimaras Company made the following export sales during the year:
Illustration 2
XHI Corporation, a VAT-registered export trader, had the following export sales during the month:
Goods Exported
Amount
Traceable Input
VAT
Processed Foods
$ 200,000
P 25,000
Fruits and
vegetables
50,000
P 45,000
Gold(74%)
Silver(18%)
Trace Elements
(8%)
Total
Final assay
Price/gram
Price
1,480 grams
P 1, 740.00
P 2, 572, 200
360 grams
43.00
15,480
160 grams
2,000 grams
P 2, 590,680
Amount
P 400,000
500,000
Exemption Status
Ukraine Embassy
400,000
Russian Embassy
600,000
Total
P1,000,000
Sales
P
Examples of transactions
covered by the zero~rating
application requirement
a. Sales to export-oriented enterprises
b. Sales of goods, supplies, equipment and fuel to persons
engaged in
international shipping or international air transport
operations
c. Sales to BOIregistered enterprises
d. Sale to tax exempt persons such as ecozones, except
senior citizens
Illustration 1
Client
Amount
DLSU, a Philippine university
a foreign dressmaker
a foreign textile manufacturer
$
P
Illustration 2
General Consultants, a VAT taxpayer, provides
various services to clients. The detail of each
transaction during the month is shown below:
Client
Place rendered
Amount
Abroad
Philippines
Philippines
Illustration 1
Mr. Johnny, a VAT taxpayer, provides pest control services to
vessels of Philippine Seagulls, a domestic shipping company
engaged in both domestic and international shipping
operations.
Mr. Johnny earned the following during the month from
Philippine Seagulls:
Source of service fees Amount
Domestic transport division
P 400,000
International transport division
600,000
Total
1,000,000
Illustration 2
Berde Residences leases residential units to
certain embassy personnel of foreign
governments:
Foreign embassy personnel
VA T status
Mr. Vladimir Cutin
A Russian with VEIC
Mr. Marco Poroshenco
A Ukrainian without VEIC
20,000
Mrs. Janice Naran
A Mongolian without VEIC
Total
82,000
Rental
P 50,000
12,000
P 200,000,000
300,000,000
500,000,000
Illustration 2
Singapore Ocean Liners, an international sea carrier,
had the following receipts during a month:
Incoming voyage (Philippines to Abroad) P
200,000,000
Outgoing voyage (Abroad to Philippines) 300,000,000
Illustration 1
Northern Electric is a generation company with the
following receipts during a month:
Sale of electricity
12,000,000
Sale of electricity
10,000,000
Sale of electricity
30,000,000
Sale of electricity
15,000,000