In the Philippines, the “Tax
Credit Approach” is adopted in computing the Vat Payable. This means that VAT is imposed on the sale
first called “Output Vat” and a tax credit is allowed or claimed on the VAT
passed-on to his purchase cost of goods or services known as “Input Tax”. The difference is called “VAT Payable”
computed as Follows:
Sale of
Goods:
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Gross
Sales
|
|
xx
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Less:
|
|
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Sales discounts
|
xx
|
|
||
Sales returns
|
xx
|
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||
Net sales
|
|
xx
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Add:
|
|
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||
Excise tax, if any
|
xx
|
xx
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||
Tax Base
|
|
xx
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||
x
vat rate
|
|
12%
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Output
Vat
|
|
xx
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||
Less: Input vat
|
|
(xx)
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||
VAT Payable/ (Excess input tax)
|
|
xx
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||
Sale of
Services:
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Cash
received (actually and constructively)
|
xx
|
||
Deposits/Advance
payments for future projects
|
xx
|
||
Materials
charged for services
|
xx
|
||
Gross receipts
|
xx
|
||
x vate rate
|
12%
|
||
Output
Vat
|
xx
|
||
Less: Input vat
|
(xx)
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||
VAT Payable/ (Excess input tax)
|
xx
|
||
¥
Receivables
(For Sale of Services), although earned, are not included in the computation
of vat payable.
|
¥
|
Dealer in
Securities and Lending Investors:
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Gross
Selling Price
|
xx
|
||
Less:
Acquisition cost of securities sold for the month or quarter
|
(xx)
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||
Balance
|
xx
|
||
Add: Other income or incidental income
|
xx
|
||
Gross receipts
|
xx
|
||
x vate rate
|
12%
|
||
Output
Vat
|
xx
|
||
Less: Input vat
|
(xx)
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||
VAT Payable
|
xx
|
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