Professional Documents
Culture Documents
TAXATION
By:
Dr. Ruperto P. Somera, Ph.D., CBA, CPA
Tax Consultant, Professor/Lecturer
Former Director, Bureau of Internal Revenue
Former Member, Board of Accountancy
Fellow Tax Management
Fellow Tax Research
Subject to VAT
1. Sale of goods or properties related to business
or trade (actual sales or deemed sales)
The sale of goods or services should be made in the
Philippines to be subject to VAT.
PRODUCTION
MANUFACTURING
IMPORTATION
FINAL
CONSUMER
DISTRIBUTOR
WHOLESALER
RETAILER
FINAL
CONSUMER
Pxxx
Pxxx
Example
Amount
Sales
100
12.0
80
VAT
9.6
20
2,4
10
11
NO
YES
Gross receipts or
sales subject to
12% output VAT
and a benefit of
input VAT on
purchases
YES
NO
12
BUSINESS REGISTRATION
VAT - Registered
1. With gross
sales/receipts of
more than P1,919,500
per year
2. With gross
sales/receipts of
P1,919,500 and below
per year and opted to
be registered as VAT.
Non-VAT - Registered
1. With gross
sales/receipts below
P1,919,500
2. Percentage taxes
(sales tax)
13
VAT Person
1. Vat Taxable
2. Zero-VAT
3. VAT-Exempt
Non-VAT Person
1. VAT-Exempt
2. Other percentage TAX
Sales/Receipt of
Registered as VAT
VAT Person
VAT Taxable
Transaction
14
Sales Receipts
of VAT
registered
Business other
than those
subject of other
Percentage Tax.
Importations,
other than
Zero-Exempt
Sales / Receipts of
Non-VAT business,
exceeding
P1,919,500 year,
Gross receipts of
Radio / TV
franchise holder,
more than
P10,000,000 a
year.
15
Dr. Purchases
Input Taxes
Cr. Accounts Payable/Cash
Dr. Accounts Payable/Cash
Cr. Purchase Returns
Input Taxes
18
19
RATES OF VAT
Output Tax
1. 12% standard rate;
2. 0% (zero rate)
Input Tax
1. 12% standard rate;
2. 0% (zero rate)
3. 2% transitional or 12% actual input tax rate;
4. 4% presumptive input tax rate; and
5. 5% final withholding tax rate.
20
Bookkeeping Requirements
Books for VAT Purposes
a) Subsidiary sales journal
Date
Zero-rated
Sales
Exempt
Taxable
Deemed
Sales
Out VAT
21
Bookkeeping Requirements
B) Purchases journal.
Date
Good for
Sale
Supplies
Raw
Materials
Services
Capital
Goods
Input deemed
paid Purchase
22
Invoicing requirements
The words VAT EXEMPT SALE written or printed
prominently if sale is VAT-exempt
The words ZERO-RATED SALE written of printed
prominently if sale is subject to zero percent
Option of issue combined or separated
invoices/receipts if sale is a combination of VATable
and VAT-exempt sale. If combined the voice or
receipts should indicate the break-down of the sale
price between the taxable and the exempt component
and the calculation of the VAT.
23
Invoicing requirements
For sales to VAT-registered persons
amounting to P1,000 or more, indicate the
name, business style, address and TIN of the
purchaser
Requirements previously applies on sale of at least
P100 and , regardless of amount, where purchaser
is a VAT registered person
24
25
26
1st QTR.
2nd QTR.
3rd QTR.
4th QTR.
Months
Forms to be
Used
Under
Manual Due
Date
Under EFRS
Due Date
January
2550M
February 20
February 25
February
2550M
March 20
March 25
March
2550Q
April 25
April 25
April
2550M
May 20
May 25
May
2550M
June 20
June 25
June
2550Q
July 25
July 25
July
2550M
August 20
August 25
August
2550M
September 20 September 25
September
2550Q
October 25
October 25
October
2550M
November 20
November 25
November
2550M
December 20
December 2028
December
2550Q
January 25
January 25
TAXABLE TRANSACTIONS
A taxable transaction could either be (a) a
sale, barter or exchange of goods or
properties in the course of trade or
business (b) sale of service, or lease or use
of goods or property, in the course of trade
or business.
30
31
Types of sale
Actual sale The sellers output tax
automatically becomes the VAT-registered
buyers input tax, which the latter can credit
against his output tax on his taxable sales of
goods, properties or services during the quarter.
However, the output tax passed on by a VATregistered seller becomes part of the cost of
acquisition of an asset or an expense of a nonVAT-registered (or VAT-exempt) buyer.
34
Types of sale
Deemed sale The following transactions are
considered as deemed sale:
a)Transfer, use or consumption not in the course
of business of goods or properties originally
intended for sale or for use in the course of
business;
b)Distribution or transfer to shareholders or
investors as share in the profits of the VATregistered persons or to creditors in payment of
debt;
35
Types of sale
c) Consignment of goods, if actual sale is not
made within sixty days following the date
such goods were consigned; and
d) Retirement from or cessation of business,
with respect to inventories of taxable goods
existing as of such retirement or cessation.
Retirement from or cessation of business
with respect to all goods on hand, whether
capital goods, stock-in-trade, supplies or
material as of the date of such retirement or
cessation.
36
37
41
42
OUTPUT TAX
Vatable Sales/Receipt-Private
Sales to Government
Zero Rated Sales/Receipts
Exempt Sales/Receipts
Deemed Sale
Rate
12%
5%
0%
Exempt
12%
43
45
46
47
48
49
50
51
Excise Tax
Exciseable Products Old Rate
New Rate
Naphtha, regular
gasoline and similar
products of distillation
P4.80
P4.35
Kerosene
P0.60
P0.00
P1.63
P0.00
P0.30
P0.00
2%
No excise tax
52
VAT-Exempt Transactions
1. Sale or importation of agricultural
and marine food products in their
original state, livestock and poultry
of a kind generally used as, or
yielding or producing foods for
human consumption; and breeding
stock.
54
VAT-Exempt Transactions
2. Sales or importation of fertilizers, seeds,
seedlings and fingerlings, fish, prawn,
livestock, and poultry feeds, including
ingredients, whether locally produced or
imported, used in the manufacture of
finished feeds (except specialty feeds for
race horses, fighting cocks, aquarium
fish, zoo animals and other animals
generally considered as pets)
55
VAT-Exempt Transactions
3. Importation of personal and
household effects belonging to
residents of the Philippines
returning from abroad and nonresident citizens coming to resettle
in the Philippines;
56
VAT-Exempt Transactions
4. Importation of professional instruments
and implements, wearing apparel,
domestic animals, and personal
household effects (except any vehicle,
vessel, aircraft, machinery and other
goods for use in the manufacture and
merchandise of any kind in commercial
quantity) belonging to persons coming to
settle in the Philippines
57
VAT-Exempt Transactions
5. Services subject to percentage tax
Sales or lease of goods or properties or
the performance of services of non-VATregistered persons, the gross annual
sales and/or receipts of which does not
exceed the amount of P1,919,500.00
58
VAT-Exempt Transactions
6. Services by agricultural contract
growers and milling for others of
palay into rice, corn into grits, and
sugar into raw sugar;
7. Medical, dental, hospital and
veterinary services, except those
rendered by professionals.
59
VAT-Exempt Transactions
8. Educational services rendered by
private educational institutions duly
accredited by the Department of
Education (DepED), the
Commission on Higher Education
(CHED) and the Technical
Education and Skills Development
Authority (TESDA);
60
61
VAT-Exempt Transactions
9. Sales by agricultural cooperatives duly
registered and in good standing with the
Cooperative Development Authority (CDA)
to their members, as well as sale of their
produce, whether in its original state or
processed form, to non-members;
62
VAT-Exempt Transactions
10.Gross receipts from lending activities by
credit or multi-purpose cooperatives duly
registered and in good standing with the
Cooperative Development Authority.
11.Sales by non-agricultural, non-electric and
non-credit cooperatives duly registered
provided, that the share capital contribution
of each member does not exceed Fifteen
Thousand Pesos (P15,000.00)
63
65
66
VAT-Exempt Transactions
Export sales by persons who are
not VAT-registered;
Sales of real properties are exempt
from VAT:
Sale of real properties not primarily
held for sale to customers
Sale of real properties utilized for lowcost housing
67
Zero-Rated
Sales
68
Zero-rated sales
Zero-rated sales
b. Foreign currency denominated sale sale to a nonresident of goods assembled or manufactured in the
Philippines for delivery to a resident in the Philippines,
paid for in acceptable foreign currency
c. Sales to persons or entities whose exemption under
special laws and international agreements to which the
Philippines is a signatory subjects such sales to zeropercent (0%) rate, such as entities registered with the
following:
1. Subic Bay Metropolitan Authority and Clark
Development Authority
2. Philippine Economic Zoe Authority or PEZA; and
3. Asian Development Bank or ADB and International
Rice Research Institute or IRRI (under international
agreements).
70
Zero-rated sales
a. Processing, manufacturing or repacking or
exported goods for persons doing business
outside the Philippines, paid for in acceptable
foreign currency in accordance with BSP rules
and regulations;
b. Services to persons doing business outside the
Philippines or to a non-resident person not
engaged in business who is outside the
Philippines, the consideration of which is paid for
in acceptable foreign currency in accordance with
BSP rules and regulations;
71
Zero-rated sales
c. Services rendered to persons or entities whose
exemption under special laws or international
agreements to which the Philippines is a signatory
effectively subjects such services to zero-percent
(0%) rate;
d. Services rendered to persons engaged in
international shipping or international air transport
operations, including leases of property for use
thereof;
e. Services performed by subcontractors and/or
contractors
in
processing,
converting,
or
manufacturing goods for an enterprise whose
export sales exceed 70% of total annual
72
production;
Zero-rated sales
f. Transport of passengers and cargo by air or sea
vessels from the Philippines to a foreign country;
and
g. Sale of power of fuel generated through
renewable sources of energy such as, but not
limited to, biomass, solar, wind, hydropower,
geothermal, ocean energy, and other emerging
energy sources using technologies such as fuel
cells and hydrogen fuels.
73
74
Sales of Services
75
78
Gross Receipts
Means the total amount of money or its
equivalent representing the contract price,
compensation, services and deposits
applied as payments for services rendered
and advanced payments actually or
constructively received during the taxable
period for the services performed or to be
performed for another person, excluding
value-added tax.
79
Constructive receipt
Deposit in Banks
Issuance by the debtor of a
notice of offset any debt or
obligation
Transfer of the amounts
retained by the payor to the
account of the contractor
80
Constructive receipt
Occurs when the money consideration or its
equivalent is placed at the control of the person who
rendered the service without restrictions by the payor.
1.Deposits in bank which are made available to the
seller of services without restrictions;
2.Issuance by the debtor of a notice to offset any debt
or obligation and acceptance thereof by the seller as
payment for services rendered; and
3.Transfer of the amounts retained by the payor to
the account of the contractor.
81
83
Professional / Technical
Services
The supply of technical advice,
assistance or services rendered in
connection with technical management
or administration of any scientific,
industrial or commercial undertaking,
venture, project or scheme.
84
Professional / Technical
Services
a. Performed or rendered by construction
and service contractors;
b. Stock, real estate, commercial customs
and immigration brokers;
c. Persons engaged in milling, processing,
manufacturing or re-packing;
d. Dealers in securities;
e. Lending investors;
85
Professional / Technical
Services
f.
Transfer of Technology
Consists of the supply of scientific,
technical, industrial or commercial
knowledge or information to and
furnished as a subsidiary assistance to
and furnished as a means of enabling
the application and enjoyment of the
technology transfer.
87
Transfer of Technology
a. The lease or use of any industrial,
commercial knowledge or information;
b. The supply of scientific, technical, industrial
or commercial knowledge or information; and
c. The supply of any assistance that is ancillary
and subsidiary to and is furnished as a
means of enabling the application or
employment of any such property or right.
88
89
90
92
94
12% VAT
3% Common Carriers Tax
12% VAT
12% VAT
95
Input TAX
96
98
Input Taxes
Purchase or importation of goods
Purchase of real properties for which a VAT
has actually been paid
Purchase of services in which a VAT has
actually been paid
Transactions deemed sale
Transitional input tax
Presumptive input tax
Transitional input tax credits
99
Input taxes
Sources of Input Tax
Domestic Purchases Capital Goods above P 1 million
Domestic Purchases Capital Goods less than P 1 million
Domestic Purchases Goods
Domestic Purchases Services
Importations Capital Goods above P 1 million
Importations Capital Goods less than P 1 million
Importations Goods
Presumptive Input Tax on Goods and Supplies
100
104
Substantation Requirements on
Input Tax
A. IN GENERAL:
1. Proof that input tax was incurred in the
course of trade or business.
2. Supported by VAT invoice or receipt bearing
VAT number of seller.
3. Seller must be vat registered.
4. Purchaser must also be VAT registered.
5. Invoice must be in the name of buyer.
6. Address of buyer is indicated.
105
7. Business style of buyer.
106
107
Input taxes
Presumptive/transitional input tax credits
Reduces from 8% to 2% the optional
transitional input tax credit allowed on
beginning inventory of persons becoming
liable to VAT
Increases from 1 % to 4% the
presumptive input tax credit for
manufacturers of sardines, mackerel, milk,
refined sugar, cooking oil and, under the
bill
108
109
110
112
117
120
121
122
123
126
127
130
132
133
Vat Refunds
2 issues:
1.Reckoning date for the 2-year period
- filing of tax return? Or close of taxable
quarter?
2.Period of 120 days for the BIR to act on
claims
135
136
137
138
139
142
144
146
148
REVENUE REGULATIONS
NO. 18-2011
Providing Penalties for Violation of the
Requirement that Output Tax on the Sale of
Good and Services Should be Separately
Indicated in the Sales Invoice or Official
Receipt
149
REVENUE REGULATIONS
NO. 1-2012
Requiring the Mandatory Submission of
Quarterly Summary List of Sales and
Purchases (SLSP) by All VAT Registered
Taxpayer Thereby Amending
151
152
REVENUE REGULATIONS
NO. 3-2012
Effectivity of Threshold Amounts for Sale of Residential Lot,
Sale of House and Lot Lease of Residential Unit and Sale
or Lease of Goods or Properties or Performance of Services
covered by Section 109 (P), (Q) and (v) of the Tax Code of
1997
153
Section
Adjusted threshold
amounts
1,5000,000
1,919,500.00
2,500,000
3,199,200.00
10,000
12,800.00
1,500,000
1,919,500.00
154
Revenue Regulations
No. 13-2012
VAT treatment on Sale of Adjacent
Residential Lots, House and Lots or Other
Residential Dwellings, thereby Amending
Certain Provisions of Revenue Regulations
No. 16-2005, as amended, Otherwise
Known as Consolidated VAT Regulations of
2005
155
Revenue Memorandum
Circular No. 35-2012
Clarifying the Taxability of Clubs
Organized and Operated
Exclusively for Pleasure,
Recreation, and Other Non-Profit
Purposes.
158
Income Tax
Clubs which are organized and operated exclusively for
pleasure, recreation, and other non-profit purposes are subject
to income tax under the National Internal Revenue Code of 1997
as amended. According to the doctrine of casus omissus pro
omisso habendus est, a person object or thing omitted from an
enumeration must be held to have been omitted intentionally.
The provision in the National Internal Revenue Code of 1977
which granted income tax exemption to such recreational clubs
was omitted in the current list of tax exempt corporations under
National Internal Revenue Code of 1997, as amended. Hence,
the income of recreational clubs from whatever source, including
but not limited to membership fees, assessment dues, rental
income, and service fees are subject to income tax.
159
161
Income Tax
-the amounts paid in as dues or fees by
homeowner-members of a homeowners association
form part of the gross income of the latter subject to
income tax. This is because a homeowners
association furnishes its members with benefits,
advantages, and privileges in return for such
payments. For tax purpose, the association dues
membership fees and other assessments/charges
collected by a homeowners association constitute
income payments or compensation for beneficial
services it provides to its members and tenants.
163
Thank You
and
May GOD Bless You
in all the days of your life.
166