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    The Value Added Tax On Sales

    Uploaded by

    Jean Diane Jovelo
    The document discusses the scope and types of value added tax (VAT) on sales in the Philippines. It covers VAT exempt and zero-rated transactions, as well as output and input VAT. Examples are provided to illustrate VAT calculations for taxpayers with mixed sales and quarterly VAT reporting.

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    © All Rights Reserved
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    The Value Added Tax On Sales

    Uploaded by

    Jean Diane Jovelo
    18 views4 pages
    The document discusses the scope and types of value added tax (VAT) on sales in the Philippines. It covers VAT exempt and zero-rated transactions, as well as output and input VAT. Examples are provided to illustrate VAT calculations for taxpayers with mixed sales and quarterly VAT reporting.

    Original Title

    THE VALUE ADDED TAX ON SALES

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    The document discusses the scope and types of value added tax (VAT) on sales in the Philippines. It covers VAT exempt and zero-rated transactions, as well as output and input VAT. Examples are provided to illustrate VAT calculations for taxpayers with mixed sales and quarterly VAT reporting.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views4 pages

    The Value Added Tax On Sales

    Uploaded by

    Jean Diane Jovelo
    The document discusses the scope and types of value added tax (VAT) on sales in the Philippines. It covers VAT exempt and zero-rated transactions, as well as output and input VAT. Examples are provided to illustrate VAT calculations for taxpayers with mixed sales and quarterly VAT reporting.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 4

    THE VALUE ADDED TAX ON SALES

    I. The Scope of the VAT on Sales

    VAT covers all sales of goods, properties, services or lease of properties other than:
    1. VAT exempt sales
    2. Services specifically subject to percentage tax

    Provided that the seller must be a VAT registered person or a registrable person.

    Registrable person- person who exceeded the VAT threshold are subject to VAT even if not
    registered as a VAT tax payer. Take note that, a VAT registered person will be subject to VAT
    even if its annual sales do not exceed the VAT threshold

    The VAT Threshold is P1,919,500

    Example 1
    Di Co is a VAT registered taxpayer with sales not exceeding the P1,919,500 VAT threshold in
    any 12 month period.

    Ans.

    Di Co shall pay VAT on its vatable sales or receipts even if its below the VAT threshold because
    it is a VAT registered taxpayer.

    Example 2

    Ri Co, a non VAT registered taxpayer, exceeded the VAT threshold on August 2020. He
    reported a P200,000 sales in September 2020.

    Ans.

    Ri Co shall pay VAT effective September 2020.

    II. VAT Exempt Transactions:


    1. Exempt importations
    2. Exempt sales
    3. Services specifically subject to percentage tax
    4. Export sales of non VAT taxpayers
    Comprehensive Problems

    Example 1: Taxpayers with mixed types of sales

    The following is the sales of the company for the last 12 month period.

    Fertilizers, seeds, poultry, and hog feeds P1,200,000


    Fruits and vegetables 800,000
    Groceries 800,000
    Dress, clothes and other apparels 600,000
    Furniture 400,000
    Total 3,800,000

    Ans.

    Vatable sales are:

    Groveries 800,000
    Dress, clothes and other apparels 600,000
    Furnitures 400,000
    Total 1,800,00

    Fertilizers, seeds, poultry, hogdees, fruits and vegetables are exempt sales.

    Since the total vatable sales is below the VAT threshold. It is still subject to percentage tax.

    The VAT model


    The VAT payable of a VAT taxpayer is computed as

    Output VAT Xx

    Less: Input VAT Xx

    Net VAT payable Xx

    Less: Tax credits or Xx


    payments
    Tax payable Xx
    (overpayment)
    III. Output VAT

    Output VAT is the VAT passed on by a VAT taxpayer on his sales to customers or clients.

    Types of Output VAT


    1. Regular Output VAT
    2. Zero Output VAT

    Regular Output VAT


    It is computed as 12% of the following:
    a. Sellers of goods or properties- Gross selling price
    b. Sellers of services or lease of properties- Gross receipts

    Zero Output VAT


    It arises from the export sales of VAT taxpayers. It arises from transactions considered export
    sales and those granted with zero rating treatment.

    INPUT VAT
    It is the passed on VAT by suppliers or VAT paid on importation of VAT taxpayers. These are
    paid by the VAT taxpayers on their purchases of goods or services.

    Sale to Government and GOCCs


    Sales under this is subject to withholding VAT of 5%. The 5% withilding VAT is presumed the
    VAT payable of the seller. Because of this, the claimable input VAT of the seller is effectively
    set by the law at 7% of gross sale to the government or GOCCs.

    VAT reporting
    The output VAT and the input VAT are determined every month but VAT reporting is made on a
    monthly and quarterly basis.

    Example 1.

    A VAT taxpayer using the calendar year had the following output VAT and input VAT during
    the month of January to April 2020:

    January February March April


    Output VAT 80,000 90,000 85,000 75,000
    Input VAT 60,000 80,000 65,000 70,000
    Solution:

    January February March April


    Output VAT 80,000 90,000 255,000 75,000
    Less: Input VAT 60,000 80,000 205,000 70,000
    Monthly VAT 20,000 10,000 5,000
    payable
    Less: VAT paid 30,000
    in prior months

    Quarterly VAT 20,000


    payable

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