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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
!