SOURCES OF OUTPUT TAX:
·
Actual Sale
o
Domestic
o
Export or Zero Rated Sales
·
Transactions Deemed Sale
1.
ACTUAL SALE
Ø Gross Sales include (a)Cash sales, (b)Sales on account, (c)installment sales, (d)deemed sales, and (e)other amounts due from buyer as
for packaging, delivery, and insurance.
Ø Excise Tax, if any, is included
in the gross sales, while VAT is excluded.
SALES
DISCOUNTS, SALES RETURNS AND ALLOWANCES
v Sales Discount granted and indicated in the
invoice at the time of sale and the grant of which does not depend
upon the happening of future event may be excluded from gross sales within the
same month or quarter it was given.
v Sales Returns and Allowances may be
deducted from gross sales for the month or quarter in which refund is made or a
credit memo was issued.
v SALE OF GOODS OR SERVICES TO PERSONS WITH
DISABILITY
(RR 1-2009).
Vat
on sale of Goods or services with sales discounts granted by business
establishments shall be computed in accordance with the following illustration:
Sales
(exclusive of vat)
|
xx
|
Less: 20% discount
|
(xx)
|
Vatable
sale
|
xx
|
Add:
12% vat
|
xx
|
Total amount to be paid
|
xx
|
The
foregoing privileges to person with disability shall not be claimed if the said
person with disability claims a higher discount as may be granted by a
commercial establishment and/or under existing laws or in combination with
other discount program/s. Thus, a person
with disability who is at the same time a senior citizen can only claim one 20%
discount on a particular sale transaction
v SALE OF GOODS OR SERVICES TO SENIOR CITIZENS (RR 7-2010).
EXEMPT
FROM VAT (refer to a separate discussion)
2.
TRANSACTIONS
DEEMED SALE
The
following transactions are DEEMED SALE for VAT purposes:
|
Basis
|
|
Market Value
|
·
shareholders or investors as
share in the profits of a VAT-registered person.
·
Distribution or transfer to creditors in
payment of debt or obligation.
|
Market Value
|
·
Goods RETURNED WITHIN the 60-DAY
PERIOD are not deemed sold.
|
Market Value
|
·
Capital goods
·
Stock in-trade
·
Supplies or materials
The following circumstances, among others,
give rise to transactions deemed sale
i. Change of
ownership in the business. There is a
change in the ownership in business when:
1.
a single proprietorship incorporates
2.
the proprietor of a single proprietorship
sells his entire business.
ii. Dissolution
of a partnership and creation of a new partnership which takes over the
business
·
Change of control of corporation by the
acquisition of the controlling interest of such corporation by another
shareholder or group of shareholder,
|
Acquisition Cost or
Current Market Price whichever is lower
|
3.
ZERO RATED
SALES
A zero rated sale of
goods, properties and/or services (by a VAT registered person) is a taxable
transaction for VAT purposes, but shall not result in any output tax. However,
the input tax on purchases of goods, properties or services, related to such
zero-rated sale, shall be available as tax credit or refund in accordance with
existing regulations.
VAT
Exempt Transaction
A VAT-exempt
transaction, on the other hand, refers to the sale of goods, properties or
services or the use or lease of properties that is not subject to VAT (output
tax) under Section 109 of the Tax Code of 1997, and the seller/supplier is not
allowed any tax credit of VAT (input tax) on purchases related to such exempt
transaction.
Zero rated sale versus Exempt sale
|
|||
Transaction
|
Taxpayer
|
VAT rate
|
Related
Input vat
|
Zero Rated Sale
|
·
VAT registered
|
0%
regardless of any
shipping arrangement
|
·
Input Vat on goods subjected to 0% vat can
claimed as deduction against output vat.
|
Exempt Sale
|
·
Non-VAT registered
|
none
|
·
The input Vat on goods cannot be claimed as deduction against output vat.
|
"cross
border doctrine" means that no VAT
shall be imposed to form part of the cost of goods destined for consumption
outside the territorial border of the Philippine taxing authority.
3.1. The following SALES shall be
subject to ZERO PERCENT (0%) rate:
a.
Sale of goods which are directly shipped by a
VAT-registered resident to a place outside the Philippines (Export Sales).
b.
Sale of goods which are considered as "Deemed" Export sales by a
VAT-registered person to certain entities who are also residents of the
Philippines:
1.
Sales to Export-Oriented
enterprises which the Code considers as export sales at the level of the
supplier of raw materials.
Ø Zero rated ONLY IF “Sale of raw materials or
packaging materials to an export oriented-enterprise whose export sales exceed
seventy percent (70%) of actual annual production.
2.
Sales of
gold to the Bangko Sentral ng Pilipinas.
3.
Sales considered as exportation of goods under
a special law such as Executive Order No. 226 (Omnibus Investments Code of
1987) and Republic Act No. 7916 (PEZA
Law)
Example:
Ø Sale to Special Economic Zones (SEZ)
ART. 23 EO 226
That without actual exportation the following shall be considered
constructively exported for purposes
of this provision:
Ø sales to
bonded manufacturing warehouses of export-oriented manufacturers;
Ø sales to
export processing zones;
Ø sales to
registered export traders operating bonded trading warehouses supplying raw
materials used in the manufacture of export products under guidelines to be set
by the Board in consultation with the Bureau of Internal Revenue and the Bureau
of Customs;
Ø sales to
foreign military bases, diplomatic missions and other agencies and/or
instrumentalities granted tax immunities, of locally manufactured, assembled or
repacked products whether paid for in foreign currency or not: Provided,
further, That export sales of registered export traders may include commission
income: and Provided, finally, That exportation of goods on consignment shall
not be deemed export sales until the export products consigned are in fact sold
by the consignee.
Ø Sales of
locally manufactured or assembled goods for household and personal use to
Filipinos abroad and other non-residents of the Philippines as well as
returning Overseas Filipinos under the Internal Export Program of the
government and paid for in convertible foreign currency inwardly remitted
through the Philippine banking systems shall also be considered export sales.
c.
Foreign
currency denominated sales of goods.
The
phrase means sale to a nonresident
of goods (except automobiles and non-essential goods subject to excise taxes)
assembled or manufactured in the Philippines, for delivery to a resident in the
Philippines, paid for in acceptable foreign currency and accounted for in
accordance with rules and regulations.
d.
Sales to entities, the exemption of which,
under a special law or an international agreement with the Government of the
Philippines, effectively zero rates such
sales.
Example:
§ Sale of Goods to Asian Development Bank when made directly, is zero rated under the
law which provides “Sales to persons or entities whose exemption under
international agreements to which the Philippines is a signatory effectively
subjects such sales to zero rate.
3.2. The
following SERVICES performed in the Philippines shall be subject to ZERO
percent (0%) rate:
a.
"Processing, manufacturing or repacking
goods for other persons doing business outside the Philippines which goods are
subsequently exported, where the services are paid for in acceptable foreign
currency and accounted for in accordance with the rules and regulations of the
Bangko Sentral ng Pilipinas (BSP);
b.
"Services other than those mentioned in
the preceding paragraph rendered to a person engaged in business conducted
outside the Philippines or to a nonresident person not engaged in business who
is outside the Philippines when the services are performed, the consideration
for which is paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas
(BSP);
c.
"Services rendered to persons or entities
whose exemption under special laws or international agreements to which the
Philippines is a signatory effectively subjects the supply of such services to
zero percent (0%) rate;
d.
"Services rendered to persons engaged in
international shipping or international air transport operations, including
leases of property for use thereof;
e.
"Services performed by subcontractors
and/or contractors in processing, converting, or manufacturing goods for an
enterprise whose export sales exceed seventy percent (70%) of total annual
production;
f.
"Transport of passengers and cargo by air
or sea vessels from the Philippines to a foreign country; and
g.
"Sale of power or fuel generated through
renewable sources of energy such as, but not limited to, biomass, solar, wind,
hydropower, geothermal, ocean energy, and other emerging energy sources using
technologies such as fuel cells and hydrogen fuels.
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