vat law- pre-bar

8/13/2019 VAT Law- Pre-Bar

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PRE- BAR REVIEW

VALUE-ADDED TAX

BY: PROF. CARMENCITAC. DABU


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c. A tax on spending or consumption.

d. Tax on the value added by the seller

with an aggregate annual sales

exceeding P1.5M.


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Purpose of VAT system

Principally aimed at realizing the

systemof taxing goods and services

simplifying tax administration

Make the tax system more equitable.


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Vat law history

1. EO No. 273

Jan. 1, 1988

amendedseveral provisions of old NIRC

2. RA 7716- Jan. 1, 1998 EVAT law

Expanding the tax base and enhancing

its adminsitration

3. Vat provisions in NIRC )RA8424

4. RA 9337 amended VAT system and

increased rate from 10% to 12%

5. RA 9361 amended Title IV-VAT of

NIRC


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Nature

Indirect

Tax on consumption

Percentage tax


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Imposition

a) who are liable?

b) requisites for application of VAT

1) covered transactions

2) in the course of trade or

business;


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Exceptions:

a) services rendered by NRA in the Philippines

b) importation

c) incidental to business

d) transactions deemed salealthough isolated -Sec.106 (B), NIRC


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Sale of Goods or Properties

tangible or intangible, real or personal

capable of pecuniary estimation

Gross selling price total amount paid for the

goods, excluding the VAT, but

including the excise tax, if any.


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Transactions deemed sale

a) transfer, use or consumption not in the

course of business

b) Distribution or transfer to:

1) shareholders, investors-share in the

profit2) creditors-payment of debt


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c) Consignment of goods

1) no actual sale2) within 60 days from consignment

d) Retirement from or cessation of

business- inventories on hand


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Sale of Goods or Properties

subject to VAT:

1. Primarily for sale to customers or lease Sec. 106 (A)(1)(a)

Who is l iable under this vatable transact ion?

Exceptions to Sec. 106 (A)(1)(a):


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2. right or privilege to use patent,copyright, etc.

3. to use in the Phils. of any industrial,

commercial, or scientific equipment;


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4. use motion picture films, tapes, discs

5. radio TV, satellite transmission and

cable TV time


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Zero-rated transactions:

(a) export sales- Sec. 106(A)(2)

(b) foreign currency denominated sale

(c) sale to persons/entities exempts or subjects

such sale by special law or international

agreement to which the Phils. is a signatory

(d) transactions under Sec. 108 (B)


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Sale or exchange of services

performance of all kinds of services

for others in the Philippines for a fee

or remuneration or consideration;

include lease of property.

Gross receipts total amount paid, actually

or constructively received


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Zero-rated services under Sec. 108 (B)

Requisites:

1. services are performed

in the Philippines

2. performed by VAT-registered

persons


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Distinction between:

Zero-rated

sale of goods/properties

and

Effectively zero-ratedsale of goods/properties


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Transfer of goods by tax-exempt

persons Sec. 107(B)

Tax-exempt transactions Sec. 109

Tax-exempt importationimporter is exempt;

but purchaser, transferee or recipient

considered importer liable to VAT.


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Sec. 109(1)(A) and (L)

sale of agricultural and marine products

compared

Sec. 109 (1)(V) - options


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Is the limitation of P1.5M gross receipts under

Sec. 109(1)(V) applicable to all enumerations?

P1.5M residential lot

P2.5M residential house and lot and other

residential dwellings


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Sec. 109 (1)(P) Vat not applicable,

but see Sec. 106(1)(A)

Sec. 109(1)(Q) Lease of residential unit

wd monthly rental not exceed P10,000

regardless of annual rentals (RR-16-2005)


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1. Can lessor shift the burden to lessee?

Requirements:

2. Rules on rental of residential unit

3. Effect of vat-exempt lessor issues

vat receipts-


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COMPUTATION OF VAT

Formula : Output Tax

less - Input Tax

VAT payable

Formula: Computation of Taxable Income:Gross Receipts

less Vat due (output tax)

Income net of VAT

less exemptions/deductions/exclusions

Taxable income


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Input > output - claim for taxcredit/refund

Input < output

pay VAT

Input = out no Vat payable


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Output tax- VAT due on the sale or lease of

taxable goods/properties/services by anyperson registered or required to be registeredunder Sec. 236, NIRC

Input tax -VAT due from and paid by a VATregistered person in the course of histrade or business.


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Sources of input tax

1.Purchase or importation of goods

2.Purchase of real properties and

services -

3. Transactions deemed sale-


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4. Transitional input tax 2% of the value of such inventory

or the actual VAT paid, whichever is higher

5. Presumptive input tax- 4% of gross value of primary agri

prod. used in their production


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Persons who can avail of input tax credit

VAT-registered person whether or not

engaged in transactions subject to VAT


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Refund or tax credit of excess input tax

Who may claim for refund/apply for issuance of tax creditcertificate:

VAT-registered person whose sales are zero-rated or

effectively zero-rated


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Period to file claim/applyfor issuance of tax

credit certificate

2 years after the close of thequarter when the sale was made.

Period when CIR refund/issue of TCC

- within 120 days from date of submission of

complete documents by TP


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Manner of giving refund:

Warrants drawn by CIR or his duly authorized

representative; but subject to post-audit by COA

(Sec. 112, amended by RA 8424)


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Remedy of TP if claim is denied

30 days from receipt of decision or

30 days from expiration of 120 days

appeal to CTA.


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Compliance requirements:

1. registration

2. Invoicing requirements

a. Issuance of VAT invoice or ORb. Invoice or OR should state TP

VAT or non-VAT with TIN

c. Date of transaciton

d. Total amount paid includes 12%VAT


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e Name and address of buyer wd TIN

f. Show the amount of 12% VAT

Return and Payment of VAT-

file return and pay monthly every 20thof the month; 25th

of the quarter


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Withholding of Final VAT

by the governmentpurchase of goods 5%

lease or use of property or

property rights to NR owner

10%

withholding agent payor or in control

of the payment

remit within 10 days/following the end of the month withheld


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END

GOOD

LUCK

!

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