VALUE-ADDED TAX

1. Value Added Tax
(Tax 71 - H)

2. VAT
VAT Definition
•
Value-added tax is a tax
on the value added to
the purchase price or
cost in the sale or lease
of goods, property or
services in the course of
the trade or business.

3. Value Added Tax Reform Act
•
Republic Act 9337 also known as the Value Added
Tax Reform Act
•
Every person who, in the course of trade or business,
sells, barters, exchanges, leases goods or property,
or renders services is subject to VAT, if the aggregate
of his actual or expected gross sales and/or gross
receipts exceeds One million Nine Hundred Nineteen
Thousand Five Hundred Pesos (P1, 1919, 500.00).
Any person who imports goods is likewise subject to
value-added tax. R.A. 9337 took effect on Nov. 1,
2005.

4. Vat on sale of Goods or Property
•
Goods or property shall mean all tangible and intangible
objects that are capable of pecuniary estimation shall include:
• Real property held primarily for sale to customers or held
for lease in the ordinary course of trade or business.
• The right or the privilege to use patent, copyright, design,
or model, plan, secret formula or process, goodwill,
trademark, trade brand or other like property or right.
• The right or the privilege to use in the Philippines of any
industrial, commercial or scientific equipment.
• The right or the privilege to use motion picture films,
films, and discs
• Radio television, satellite transmission and cable
television time

5. Gross Selling Price
•
Gross selling price is the total amount of
money or its equivalent, which the purchaser
pays or is obligated to pay to the seller in
consideration of the sale, barter or exchange
of the goods or properties, excluding the
value-added tax.
•
The excise tax, of any, on such goods or
property shall form part of the gross selling
price.

6. Tax Base and Rates
•
There shall be levied, assessed and collected on every sale, barter or
exchange, or transactions deemed sale” of taxable goods or property,
value-added tax equivalent to 12% of gross selling price or gross value in
money of the goods or property sold, bartered exchange, or deemed sold
in the Philippines.
•
The following sales by VAT-registered persons shall be subject to Zero-
Rate:
• Export sales
• Foreign currency denominated sale means sale to a non-resident of
goods except those mentioned in Sections 149 (automobiles) and 150
(non-essential goods), 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 for in accordance with
the rules and regulations of the Bangko Sentral ng Pilipinas.
• Sale of good or property to persons or entities whose exemption
under special law or international agreements to which the Philippines
is a signatory, such as, Asian Development Bank, International Rice
Research Institute, shall be effectively subject to VAT at zero-rate

7. Export Sale
•
The sale and actual shipment of goods from
the Philippines to a foreign country.
•
Sale of raw materials or packaging materials
to a non-resident buyer.
•
Sale of raw materials or packaging materials
to export-oriented enterprise.
•
Sale of gold to the Bangko Sentral ng Pilipinas
if the seller is a VAT-registered taxpayer.

8. Transactions Deemed Sale
•
The following transactions are “deemed sale” and
are subject to VAT:
1. Transfer, use or consumption not in the course of
business of goods or property originally intended for
sale or for use in the course of business.
2. Distribution or transfer to:
a. Shareholders or investors as share in the profits
of the VAT-registered persons.
b. Creditors in payment of debt or obligation.

9. Transactions Deemed Sale
3.Consignment of goods if actual sale is not
made within sixty (60) days following the date
such goods were consigned.
4.Retirement from or cessation of business,
with respect to inventories of taxable goods as
such of retirement of cessation.

10. Sale of Real Properties
(Based on New Thresholds)
•
Sale Of real properties held primarily for sale to customers or
held for lease in the ordinary course of trade or business of
the seller shall be subject to VAT. The following sale of
properties is subject to output VAT:
1. Sale of residential lot with gross selling price exceeding P1,
919,500.00.
2. Sale of residential house and lot or other residential dwellings
with gross selling price exceeding P 3,199,200.00.
3. Instalment sale of residential house and lot or other
residential dwellings with gross selling price exceeding P
1,000,000.
4. A real estate investment trust shall be subject to VAT on its
gross sales from any disposal of real property.

11. Advance VAT
•
Advance VAT – On Transport of Naturally
Grown and Planted Timber Products.
•
Requirement to pay advance VAT
•
The advance VAT shall be paid by the
owner/seller to the BIR through the
authorized agent banks or to the revenue
collection officers or deputized city or
municipal treasures before transporting them
from place of production or concession

12. Advance VAT Payment
•
Basis for Determining Amount of Advance VAT
Payment
•
The amount of advance payment shall be
determined by applying the VAT rate of 12%
on the corresponding value per cubic meter of
the different species of naturally grown and
planted timber products in accordance with
the following schedule:

14. Advance VAT
•
Advance VAT – Sale of Refined Sugar
•
Refined sugar refers to sugar whose content
of source by weight, in the dry state,
corresponds to a Polari meter reading of 95.5
and above.

15. Advance VAT Payment
•
Basis for Determining Amount of Advance VAT
Payment
•
The amount of advance payment shall be
determined by applying the VAT rate of 12%
on the applicable base price per 50 kg. bag of
refined sugar.

16. Advance VAT
•
Advance VAT- Sale of Flour Milled from
Imported Wheat
•
Revenue regulations 29-2003 aim to level the
playing field among players in the flour-
milling industry and to encourage proper
declaration and payment of taxes which will
result in improved efficiency in tax
administration.

17. Advance VAT
•
Advance VAT- Sale of Jewelry, Gold and Other Metallic
Minerals to NRA-NETB or NRFC
•
Revenue Regulations 5-2013 prescribes the tax treatment of
the sale of jewelry, gold and other metallic minerals to non-
resident alien individual not engaged in trade or business
within the Philippines, or to a non-resident foreign
corporation.
•
Sellers of jewelry, gold, and other metallic minerals are
required to pay business tax, income and excise tax, if
applicable, in advance through the assigned Revenue
Collection Officers of the Revenue District Office having
jurisdiction over the place where the subject transaction
occurs regardless of whether the sellers are duly registered
with the BIR.

18. How to compute Value Added Tax Payable
Value Added Tax Payable is normally computed as follows:
1. Example based on the assumption:
Total Vatable Sales (VAT exclusive)
= P100,000
Total purchases with VAT receipts
(VAT exclusive)
= P70,000
P100,000 x 12% or P12,000
-P 70,000 x 12% or P8,400
VAT Payable = P3,600
1. Computing Net VAT Payable
on VAT “exclusive”
Sales/Receipts
Total Output Tax Due
or Total Vatable
Sales/Receipts x 12%
Less: Total Allowable
Input Tax or Total Vatable
Purchases x 12%
Equals: VAT Payable

19. 2. Computing Net VAT Payable
on VAT “inclusive”
Sales/Receipts
•
Total Output Tax Due or
Total Vatable Sales / 1.12 x
12%
•
Less: Total Allowable Input
Tax or Total Vatable
Purchases / 1.12 x 12%
•
Equals: VAT Payable
2. Example based on the above
assumption:
Total Vatable Sales (VAT inclusive) =
P112,000
Total purchases with VAT receipts
(VAT inclusive)
= P78,400
P112,000 /1.12 x 12% or P12,000
– P78,400 /1.12 x 12% or P8,400
VAT Payable = P3,600

20. •
Output tax means the VAT due on the sale, lease or exchange
of taxable goods or properties or services by any person
registered or required to register under Section 236 of the
Tax Code.
•
Input tax means the VAT due on or paid by a VAT-registered
on importation of goods or local purchase of goods,
properties or services, including lease or use of property in
the course of his trade or business. It shall also include the
transitional input tax determined in accordance with Section
111 of the Tax Code, presumptive input tax and deferred
input tax from previous period.
•
Total Vatable Purchases are your total purchases from VAT
registered suppliers. This should be supported with VAT
receipts.
•
Note:
VAT exempt sales, zero rated sales, purchases not
qualified for input tax, and other input taxes (if any) should
also be shown in the VAT returns. See BIR Forms.

21. TAXABLE BUSINESS
INDUSTRIES
(Hand outs)

22. VAT EXEMPT
TRANSACTION