TAX ENDTERM

BUSINESS TAXES
1. Percentage Tax
2. Value Added Tax
 Imposed on sale of goods or services
 Business activity
3. Excise Tax

Gross Selling Price or Gross Receipts (12 months) ≤ P100,000

 Not a business activity
 Subject to income tax

Tax Rate
 12% Tax Base:
 0% Sale of Goods: Gross Selling Price

Gross Selling Price

 Is the total amount of its equivalent which the buyer pays the seller or is obligated to pay to the
seller in consideration of the sale/ barter/ exchange of goods, properties excluding VAT
 Sale of services

Gross Receipts
 The total amount of money or its equivalent representing the contract price, compensation,
service fee, rental or royalty including the amount charge for materials supplied with services
and deposits and advance payment actually or constructually received during the taxable
quarter for the services performed for another person excluding VAT

EXAMPLE:
GOODS
Cash Sales 1,000,000
Sales on Account 500,000
Collection of A/R 200,000
VAT 150,000

Gross Selling Price = P1,500,000 (1000000+500000)

VAT = X 12% =

SERVICES
Cash Sales 1,000,000
Sales on Account 500,000
Collection of A/R 2,000,000
Materials 1,500,000
Advanced Payment 800,000
VAT 636,800

Gross Receipts = 1,000,000 + 2,000,000 + 1,500,000+ 800,000

= P5,300,000
OUTPUT TAX
Less: INPUT TAX
VAT PAYABLE

Output Tax
 VAT being passed on to the buyer of goods

Input Tax
 VAT being paid on the purchased goods/ services to a VAT registered seller

EXAMPLE:
Supplies P1,000,000 X 12% → VAT exclusive
VAT P120,000
= P1,200,000
A. P1,500,000 X 12% → Customer
VAT P180,000
= P1,680,000

Output Tax P100,000

Input Tax P120,000
VAT Payable P60,000

Output Tax P180,000 → X 70% = P126,000

Input Tax P200,000
VAT Payable P54,000 → ( 180 - 126)
P74,000 → ( 200 - 126)

TRANSACTIONS DEEMED SALE

1. Consumption, use or transfer not in the course of trade or business of goods intended to be sold
in the normal conduct of business
2. Transfer to:
a. Creditors in payment of debt
b. Investors as share in profit of a VAT registered business
3. Consigned goods if the consignee has not sold the goods within 60 days
4. Cessation from business with respect to inventory on hand as the date of cessation

SOURCES OF INPUT TAX

1. Purchase of goods (non capital goods) or services from a VAT registered seller
2. Importation of Goods
3. Purchase of capital Goods
4. Transitional Input Tax
5. Presumptive Input Tax
6. VAT carry over

PRESUMPTION INPUT TAX

1. Makers/ Manufacturers
a. Sardines
b. Mackerel
c. Refined sugar
d. Cooking oil
e. Milk
f. Noodle based instant meals
 4% of Gross value purchase of agricultural products used as primary inputs in production
TRANSITIONAL INPUT TAX
GSP/ GR in any 12 months ≤ P3,000,000 → Non VAT → 3% O.P.T.
EXAMPLE
2,500,000 = Non VAT
3,200,000 = VAT
 2% of the gross value of inventory, materials or supplies at the date of transition or the actual
VAT paid therein whichever is higher

1. VAT shall be shown separately from the tax base

2. Receipt shall include VAT registered following TIN
3. If the sales exceeds P1000, shall be included:
a. Name of the buyer
b. Business style, if any
c. Address
d. TIN
e. Taxpayer ID Number
4. if a VAT receipt is issued for an exempt or Zero Rated transaction the word Zero Rated or
Exempt shall be written on the face of the receipt

EXAMPLE:
Vatable 100
Exempt 0
Zero Rate 0
VAT 12
Total 112

Erroneous issued
No VAT = no income tax DEADLINE
VAT return = filed quarterly (2550M) → 20th following the close of the
month day follow
= paid monthly (2550Q) → on or before 25th close of the
quarter

INPUT TAX ON CAPITAL GOODS (DEPRECIABLE ASSET)

 Until December 31, 2021 only
1. If the gross value of capital goods in a month excluding VAT does not exceed P1M, input tax is
claimed on the month of purchase
2. If the gross value of capital goods in a month excluding VAT exceeds P1M, input tax is spread
over the assets useful life or 60 months whichever is shorter

JAN FEB MAR

Sales P1,000,000 P2,000,000 P3,000,000
Purchases
Inventory 500,000 1,600,000 2,400,000
Supplies 50,000 10,000 40,000
Equipment ( 4yrs useful life) 1,200,000 - -
Furniture ( 6yrs useful life) - 100,000 -

Unutilized input tax in previous quarter P10,000

Compute for TAX Payable for each month (assume VAT Exclusive)
 JAN FEB
Output Tax (1M X 12%) 120,000 (2M X 12%) 240,000
Less: Input Tax
Inventory (500k x 12%) 60,000 (1.6M X 12%) 192,000
Supplies (50k x 12%) 6,000 (10K X 12%) 1,200
Equipment (1.2M x 12%) 2,000 3,000
48 months
Furniture - (100K X 12%) 12,000
VAT Carry Over 10,000 79,000 - (70%)168,000
Input Tax Payable P41,000 P72,000

MAR
Output Tax (6M X 12%) 720,000
Less: Input Tax 168,000 = DAPAT 208, 2200
Inventory (4.5M X 12%) 540,000 because the ratio exceeded 70%
Supplies (100K X 12%) 12,000 = 208200/ 240,000 = 86%
Equipment (3K X 12%) 9,000
Furniture (100K X 12%) 12,000 504,000 = DAPAT 504,000
VAT Carry Over 10,000 504,000 81% ratio
Excess Output Tax over P216,000
Input Tax 583,000 - 504,000 = 79,000 next year carry over
Less: VAT Payments (41k + 72k) 113,000
VAT Payable P103,000