QUICK NOTES IN BUSINESS TAX

Business Tax – resident buyer buys to resident seller.

CONSUMPTION TAX VAT on Importation – resident buyer buys goods to non-resident seller.
Exportation – non-resident buyer buys goods to resident seller.

Final Withholding VAT– resident buyer buys service to non-resident

seller. seller.

Business Tax VAT on Exportation Final

Importation Withholding
VAT
As to Buyer Business/Not Business/Not - Business
As to Seller Business Business/Not Business Presumed
Business
Tax Base Gross Sale Dutiable Value + Gross Sale Contract Price
Custom Duty +
Excise Tax +
In-land Cost
Tax 12% 12% 0% 12%
Payable To BIR BOC - BIR
 Those who did not exceed the 3M
3% Other threshold and did not opt to
Exempt Percentage Tax register.
NO
Is the seller a Vatable
BUSINESS TAX 12% Value
Gross sale exceed 3M in the past 12
Business? Percentage Tax months, believes gross sale will
YES Added Tax exceed 3M (10M for radio), and
VAT PAYABLE FORMULA Exempt Sale those opt to register.

Output VAT xx - vat imposed on sale Excise Tax

Regular Input VAT Purchases x 12%
Higher or 2% of beginning inventory
Less: Input VAT (xx) – vat on purchase TYPES OF Transitional Input VAT & actual input VAT
VAT Due xx Monthly VAT Credits INPUT VAT Presumptive Input VAT 4% of SAMAMICOPARE
Less: Tax Credit (xx) Deferred Input VAT Amortize over 60 months or actual if life is
VAT Payable xx Creditable VAT withheld. lesser, MAAC should be > 1M and only until
Input VAT Carry Over
Dec 31, 2021
Advanced VAT for sugar/flour 5% CWT from Government
Imported by miller – invoice
VAT paid on amended return Refined Sugar – 12% x 1,400 price + custom duties + other
INSTALLMENT REPORTING OF OV for every 50kg or 168/50kg. charges
Purchase by miller – invoice
Received Payment Flour 12% x 75% x 105% x (a+b)
x Output VAT price + freight
Contract Price
Distribution to Creditors, Shareholders, own use. Naturally Grown/Timber
Domestic Consignation not sold within 60 days. Products
TRANSACTION
Retirement/Cessation of Business (lower of AC & MV) Sale of jewelry, gold, metallic
DEEMED SALE minerals
Transmission of properties to trustee (MV @ time of transaction)

Exempt Sale – cannot claim input vat (expense)

MIXED 0% Rated Sale – can claim input vat or refund Input Vat not attributed to any
sales should be pro-rated
TRANSACTION Sale to Government – 5% CWT, can claim input vat based on total gross sale.
S
Regular Sale – can claim input Vat
 Specific Customers: Renewable
-Asian Development Bank Sources: Biomass,
ZERO-RATED SALE – input VAT here is creditable! -Intl Rice Research Ins Solar wind,
-United State agency for intl dev hydropower,
Direct Export – acceptable foreign currency, accordance with BSP. -Embassies -UN geothermal,
-Phil National Redcross steam, ocean
GOODS Indirect Export – sale to registered export enterprise, used directly. -PAGCOR -PEZA energy, fuel cell,
-SBMA - REE hydro fuel.
International Carriers – should be use for outbound transfer.

Sale to specific customer – required approval of BIR if without VAT TRANSITION

approval – exempt not 0% rated.
Timely VAT Not Timely
Registration
Service to specific customer.
RIT *liable to VAT *subject to vat starting
Sale to non-resident – should be performed in PH, from month of the month following the
acceptable currency/ BSP. registration month of breach (can’t
(can avail avail input vat - can only
SERVICES Indirect Export – services to REE. input vat) avail input vat starting
from month of
Rendered to International Carriers for international carriers.
registration)
Outbound transport of passenger/cargo of domestic carriers. *GPT paid during month
that should be 12% is
Sale of power/fuel from renewable sources. credit/refunded.
8% * Pay GPT *Pay for GPT from start
VAT Registrable = output vat (no input vat)
Optional from start of of taxable year up to
ERRONEOUS Non-VAT Taxpayer issues VAT invoice = percentage tax + OV taxable year month of breach
+ 50% surcharge on OV Tax
TAXABLE up to month *subject to vat starting
SALES Exempt Sale billed as regular = OV less IV of breach the month following the
Error in computation of VAT = invoice price + VAT paid / *Liable to VAT month of breach (can’t
from month of avail input vat - can only
112% x 12% less input vat registration avail input vat starting
(can avail from month of
DETERMINATION X 12% VAT Reporting – Quarterly
input vat) registration)
OF VAT 2550Q – 25th day after the taxable quarter
/112% X 12%
Summary List: Purchases, Sale, Importation
EXEMPTION TO BUSINESS TAX E. Employment – employer – employee relationship

F. Crude Oil – intended to be refined at local refinery.

A. Basic Human & Related Products
a. Agricultural marine food products
G. Education
b. Livestock, Poultry
a. School – accredited by DEPED, CHED, TESDA
c. Breeding Stock & Genetic Materials
b. Educational materials – not for advertisement, compliance with
d. Fertilizers, Seeds, Seedlings, Fingerlings
national book development board requirement.
e. Ingredients use in manufacture of finished feeds.
*Should be in original state: preparation, preservation, packaging
H. Export Sale
NRC coming to resettle in PH a. VAT registered – 0%
B. Quasi-Importation
b. Non-VAT – exempt
a. Personal Household Effects Exempt form custom duties
b. Professional Instrument of overseas Filipinos to settle in the PH I. Sale Tor Senior Citizen & PWD
i. Must accompany 90 days before or after arrival a. Drugs, vaccine & foods for special medical
ii. Proof of change of residence b. Vitamins and mineral supplements*
iii. Not for commercial purpose c. Accessories and equipment*
d. Casket/Urn/Theater/Cinemas
C. Agricultural Services – by agricultural contract grower and milling.
*for senior citizen only
*Palay into rice, corn into grits, sugar cane into raw sugar
J. Regional Area Headquarters – supervisory, communication, coordinating
D. Health centers of a foreign company.
a. Medical/Dental/Hospital/Veterinary Services K. Sale of Gold to BSP
b. Medicine for certain Illnesses L. Association Dues/Membership of
i. Diabetes v. Mental Illnesses M. Services Specifically Subject to Percentage Taxes
ii. High Cholesterol vi. Kidney Diseases N. Association Dues/ Membership of homeowner’s association
iii. Hypertension vii. Tuberculosis
iv. Cancer
 O. Domestic or International Carriers

PH → PH PH → Abroad Abroad → PH
Pass Cargo Pass Cargo Pass Cargo
Domestic Land 3% CCT 12% - - - -
Air/Sea 12% 12% 0% 0% Exempt Exempt
International Land 12% 12% - - - -
Air/Sea 12% 12% Exempt 3% ICT Exempt Exempt
Sale Importation or Lease of Passenger or Cargo vessel/aircraft, engine. Equipment, spare parts – exempt:
→ use for domestic/international operation.
→ restriction of MARINA: retirement
Passenger/Cargo vessel – 15 yrs
Q. Real Property Sale or Lease by a Realty Dealer
Tankers – 10 yrs
Highspeed passenger crafts – 5 yrs Before
After 2021
Importation of fuel goods and supplies by shipping /air transport. 2021
Socialized Housing Units
House & Lot 450k 450k
P. Cooperative – must be registered with CDA. Residential Lot only 180k 180k
a. Agricultural Cooperative d. Other Cooperative Low-cost housing 750k Vatable
i. own produce (exempt) i. transacting only with members & Residential lot 1,919,500 Vatable
ii. other product transacting with non-members with acc 3,199,200
Residential house & lot 3,199,200
*to member – exempt reserve <= 10M *3.6M starting 2024
* to non-member – vatable *registered product – exempt Lease of Residential
15k/month 15k/month
b. Credit or Multi-purpose * not registered – vatable Unit
i. Lending (exempt) ii. transacting with non-members with acc
ii. non-lending (vatable) reserve > 10M Lease of Residential Unit: if more than 15k/month:
c. Electric Cooperative – vatable *registered or not - vatable ➔ Annual receipt of <= 3M, use GPT
➔ Annual receipt > 3M, 12 VAT
Sale of adjacent lot within 12 months → aggregated.
SERVICES SPECIFICALLY SUBJECT TO PERCENTAGE TAXES
A. Common Carriers Tax – 3% Other Percentage Tax/General Percentage Tax
– vatable sale of non-vat.
B. International Carriers Tax – 3%
Base on Gross Sale. -3% (1% July 1, 2020 – June 30, 2023)
C. Franchise Tax – 3% Radio, 2% Water/Gas
D. Overseas Communication Tax - 10%
E. Gross Receipt Tax – 1/5/7%
F. Amusement Tax – Boxing 10%, BB 15%, Cockpit/NDC 18%, Jai-alai 30%
G. Premiums Tax on Domestic – 2% Base on Gross Receipt.

H. Premiums Tax on Foreign – 4% agents, 5% direct owners

I. Winnings Tax – horse/jai-alai 10%, combination bets 4%, owner of horse 10%

A. Common Carriers Tax C. Franchise Tax – public franchise of:

➔ passenger via land → Radio/Television/Broadcasting
➔ except: banca, two wheeled animal drawn --) VAT registered/ exceed threshold >10M – 12% VAT
➔ Transportation network companies (grab) --) Otherwise – 3% franchise tax
--) TNC/Partner driver should have “certificate of public convenience” → Gas /Water Utilities – 2% franchise tax
– otherwise, vatable. →PAGCOR franchise tax – 5% in lieu of all local/national tax
--) Tax base is base on “Receipt Theory”
D. Overseas Communication Tax
B. International Carriers Tax → caller should be from PH
➔ Air/shipping carriers owned by foreign corporations →caller should be the payor of service
doing business in the PH in their export of goods. →outgoing call (PH → Abroad)
→except: PH embassies, PH government, International
organization, news services
E. Gross Receipt Tax
G. Premiums tax on Domestic Insurance
Bank/ Non-Bank → life/health insurance
Quasi-Bank →total premiums collected, money, notes, credits
Gross Receipt from Lending Activities →pre-issuance fees, reinstatement fee, renewal fee,
5 yrs or less 5% 5% penalties
More than 5 yrs 1% 1% →investment income realize from investment
Dividends and equity share of subsidiaries 0% n/a
Royalties, rental of property 7% n/a H. Premiums Tax On Foreign Insurance
Net trading Gain on foreign currency debt 7% n/a → non-life insurance (fire, marine, or miscellaneous)
All other items 7% 5% →through agents – 4%
→owners directly obtaining insurance to NRFC – 5%
Pre-termination: Holding Period – recompute the should be percentage tax base on
pre termination date as new date.
Net Trading Loss can be carried over for the next quarter but cannot carry
I . Winnings Tax
over on net taxable year.
→Horse Race/Jai- alai 10% net winnings
→Combination Bet 4% net winnings
F. Amusement Tax →Owners of winning horse 10% of winnings
Boxing 10%
Professional Basketball 15%
Cockpit, Cabarets, Clubs 18%
Jai-Alai, Racetracks 30%
*Boxing exemptions requisites:
1. World/oriental championship
2. One contender is FILIPINO
3. Promoter FILIPINO citizen or corporation 60% owned by FILIPINO.