meljun cortes's - tax1 (income taxation) vat lecture
TRANSCRIPT
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
Pursuant to EXECUTIVE ORDER # 273,approved by her Excellency President
Corazon C. Aquino on July 25, 1987,
VALUE-ADDED TAX LAW took effect on
January 1, 1988.
VAT is not entirely a new concept of business
taxation but is just another form of TAX
levied on a wide range of good and
services. Specifically, it simply
means TAX on the Value addedby every seller to his purchase
of goods & services.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
VAT = is an indirect tax that may be shifted orpassed on to the buyer transferer or
lesse of the goods, properties or
services
VAT = any person who, in the course of traded or
business, sells, barter, exchange, leases
goods or properties, renders services, &
any person who imports goods shall be
subject to VALUE-ADDED-TAX.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
VAT on Sale ofVAT on Sale ofGoods or propertiesGoods or propertiesVAT on Sale ofVAT on Sale ofGoods or propertiesGoods or properties
= Goods or properties shall mean all tangible
& intangible objects that are capable of
estimation.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
GROSS SELLING PRICEGROSS SELLING PRICEGROSS SELLING PRICEGROSS SELLING PRICE= it is the total amount of money or its
equivalent, which the purchaser pays oris obligated to pay to the seller
in consideration of the sale, barter, or
exchange of the goods or properties
excluding the VAT.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
TAX BASETAX BASETAX RATESTAX RATESTAX BASETAX BASETAX RATESTAX RATES
= these shall be levied, assessed & collected on every sale, barteror exchange of goods or properties, VAT equivalent to 10% ofthe gross selling price or gross value in money of the goods or
properties sold, barted or exchanged.
= it is MANDATORY that the total amount appearing in the invoice
include the value added tax without the tax being shown as a
separate item. Thus, the 10% VAT shall be computed byMultiplying the total indicated in the invoice by (1/11).
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
GROSS RECEIPTSGROSS RECEIPTSGROSS RECEIPTSGROSS RECEIPTS= It is the total amount of money or its equivalent actually
or constructively received, excluding VAT, as representing
the
1.) contract price, compensation, service fee, rented or
royalty.
2.) amount charged for materials supplied with the services
3.) deposits & advances payment on the contract of
services
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
VAT on Importation ofVAT on Importation ofGoodsGoods
VAT on Importation ofVAT on Importation ofGoodsGoods
= there shall be levied, assessed & collected on everyimportation of goods a Value-added tax equivalent to
10% based on the total value used by the Bureau of
Customs in determining TARIFF & custom duties, plan
custom duties, excise tax, if any & other charges. Theimportation prior to the release of such goods from
customs custody shall pay the VAT
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
OUTPUT TAXOUTPUT TAXINPUT TAXINPUT TAXOUTPUT TAXOUTPUT TAXINPUT TAXINPUT TAX
OUTPUT TAX = means the value-added tax due on the sale or leaseof taxable goods or properties or services by a
VAT registered person.
INPUT TAX = is the value-added tax due from or paid by a VAT
registered person in the course of his trade or
business on importation of goods or local purchased
of goods or services.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
VAT formula:VAT formula:
Output TAX PxxOutput TAX Pxx
less: Input Taxless: Input Tax xxxx
VAT PayableVAT Payable PxxPxx
VAT formula:VAT formula:
Output TAX PxxOutput TAX Pxx
less: Input Taxless: Input Tax xxxx
VAT PayableVAT Payable PxxPxx
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
ZERO RATE orZERO RATE or
Exempt transactionsExempt transactions
ZERO RATE orZERO RATE or
Exempt transactionsExempt transactions
Section 108B, TAX Reform ACT of 1997
- services performed by VAT-registered person which
is subject to ZERO Rate
Section 109(z) of the TAX Reform ACT of 1997
- any person where sales or receipt are exempt from
payment of Value-added tax because gross annualsales or receipt do not exceed the amount of 550,000
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
ComplianceComplianceRequirementsRequirements
RegistrationRegistration
ComplianceComplianceRequirementsRequirements
RegistrationRegistration
= any person subject to VAT shall register with the BIR
Revenue District Officer where his principal place of business
is located.Annual registration fee P550 for every separate or distinct
establishments or place of business shall be paid upon
registration & every year thereafter on or before the last day
of January.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
Invoicing RequirementsInvoicing RequirementsInvoicing RequirementsInvoicing Requirements
= a VAT-registered person shall issue, for every sale, an invoice or
receipt. The receipt or invoice should be prepared at least in
duplicate.
Details should indicated:
1.) Name, TIN#, Address of the seller
2.) Date of Transactions, Quantity, Unit Cost & Descriptions
3.) VAT-registered person with his TIN#
4.) Total amount purchaser pay
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
Accounting RecordsAccounting Recordsor Accounting Systemor Accounting System
RequirementsRequirements
Accounting RecordsAccounting Recordsor Accounting Systemor Accounting System
RequirementsRequirements= all person subject to VAT tax shall, in addition to the regular
accounting records required, maintain a Subsidiary Sales
JOURNAL and Subsidiary Purchases JOURNAL on whichthe DAILY SALES & PURCHASES are recorded.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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VALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAXVALUE ADDED TAX
Return & Payment ofReturn & Payment ofValue-added TAXValue-added TAX
Return & Payment ofReturn & Payment ofValue-added TAXValue-added TAX
= In general, every person liable to pay the VAT shall file a
Quarterly return of the amount of his gross sales or receipts
within 25 days following the close of each taxable quarter.
= payment for lease or use of properties or property rights to
non-resident owners shall be subject to 10% withholding tax.
For this purpose, the payor or person in control of the paymentshall be considered as the withholding agent.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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WITHHOLDING TAXESWITHHOLDING TAXESWITHHOLDING TAXESWITHHOLDING TAXESEvery employer making payment of WAGES shall deduct and withhold
upon such wages a tax determined in accordance with the rules and
regulations prescribed by the Secretary of the Department of Finance,
upon recommendation of the Commissioner of the Bureau of
Internal Revenue.
The BASIS of withholding shall be the average WAGES. When a husbandand wife are both recipient of WAGES, whether from the same or from
different employers, taxes to be withheld shall be determined on the
following bases:
1.) The HUSBAND shall be the proper claimant of the additionalexemption with respect to any dependent child, unless he explicitly
waives his right in favor of his wife in the WITHHOLDING exemption
certificate.
2.) TAXES shall be withheld from the WAGES of the wife in accordance
with the schedule for zero exemption of the Withholding Tax TABLE.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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WITHHOLDING TAXESWITHHOLDING TAXESWITHHOLDING TAXESWITHHOLDING TAXESWithholding Taxes = are applied on GROSS PAY after deducting the
MANDATORY employee contributions:- According to Section 32(B) (7) (f) of the TAX REFORM of 1997
GSIS or SSS, Medicare or PhilHealth, Pag-IBIG contributions
union dues of individuals employee are excluded from
GROSS INCOME efefctive Jan. 1, 1998.
This provision coupled with the revised personal exemptions
effectively increased the net pay of compensation income
earners.
Withholding Tax tables are avaible for various payroll periods, such as
daily, weekly, semi-monthly and monthly.
On or before the end of the calendar year but prior to the payment of the
compensation for the last payroll period, the employer shall determine
the TAX due from each employee on taxable compensation income for
the entire taxable year in accordance with the rates prescribed ranging
from 5% to 32%.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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WITHHOLDING TAXESWITHHOLDING TAXESWITHHOLDING TAXESWITHHOLDING TAXES
The difference between the TAX due from
the employee for the entire year and the
sum of taxes withheld from January toNovember shall either be withheld from
his SALARY in December of the current
calendar year or REFUNDED to the
employee not later than January 25 of the
succeeding year.
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8/9/2019 MELJUN CORTES's - Tax1 (INCOME TAXATION) VAT Lecture
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WITHHOLDING TAXESWITHHOLDING TAXESWITHHOLDING TAXESWITHHOLDING TAXES
NET PAYNET PAYNET PAYNET PAYGROSS PAY for a payroll period less the payroll DEDUCTIONS
SSS, PhilHealth, Pag-Ibig contributions of the employee;WITHHOLDING TAXES; union dues & other deductions is
equal to
NET PAYNET PAYNET PAYNET PAY