Saturday, November 8, 2014

Installment Sales / Deferred Payment (Real Property)

The sale of real property subject to vat shall either be in cash basis, installment basis, or deferred payment basis.
Installment Sales
·         If the initial payment do not exceed 25% of the selling price.  The seller or the real estate dealer shall be subject to vat on installment payments, inclusive of interest and penalties.

Deferred Payment
·         If the initial payment exceeds 25% of the selling price.  If the sale is on a deferred payment, the whole selling price shall be subject to vat (same treatment with cash basis).

Initial Payment
·         Pertain to ALL PAYMENTS which the seller receives on or before the execution of the instrument of sale, INCLUDING cash or property received, OTHER THAN the purchaser’s evidence of indebtedness, DURING THE CALENDAR YEAR when the real property was sold.
Installment received

Pxx
Add:


   Interest
Pxx

   Other charges
xx
xx
Tax base

Pxx


Upon full collection, if the zonal value or market value is higher than the total receipts or collections, the additional vat shall be paid accordingly.  (RMC 03-96);  RR 4-2007

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