Computation of Valued-Added Tax (VAT) Payable/ (Excess Input Tax)

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:
	Gross Sales			xx
	Less:
	Sales discounts		xx
	Sales returns		xx
	Net sales			xx
	Add:
	Excise tax, if any		xx	xx
	Tax Base			xx
	x vat rate			12%
	Output Vat			xx
	Less:  Input vat			(xx)
	VAT Payable/ (Excess input tax)			xx

Sale of Services:
	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)
	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:
	Gross Selling Price		xx
	Less: Acquisition cost of securities sold for the month or quarter		(xx)
	Balance		xx
	Add:  Other income or incidental income		xx
	Gross receipts		xx
	x  vate rate		12%
	Output Vat		xx
	Less:  Input vat		(xx)
	VAT Payable		xx