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VAT Report

VAT is a tax on consumption levied on the sale of goods, services, and importation at rates of 0%, 12%, or exempt. Transactions are subject to 12% VAT unless zero-rated at 0% or exempt. To be zero-rated, services must be for a foreign entity, paid in foreign currency, and the entity must be doing business abroad. Documentary evidence like service agreements and bank remittance advisories must demonstrate the nature of services, foreign payment, and recipient's foreign business.

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Noel Christopher G. Belleza
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78 views

VAT Report

VAT is a tax on consumption levied on the sale of goods, services, and importation at rates of 0%, 12%, or exempt. Transactions are subject to 12% VAT unless zero-rated at 0% or exempt. To be zero-rated, services must be for a foreign entity, paid in foreign currency, and the entity must be doing business abroad. Documentary evidence like service agreements and bank remittance advisories must demonstrate the nature of services, foreign payment, and recipient's foreign business.

Uploaded by

Noel Christopher G. Belleza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Value Added Tax

Noel Christopher G. Belleza


Value Added Tax
VAT stands for Value Added Tax. VAT is a type of sales tax
which is levied on consumption on the sale of goods, services or
properties, as well as importation, in the Philippines.
To simplify, it means that a certain tax rate (0% to 12%) is
added up to the selling price of a goods or services sold. It is also
imposed on imported goods from abroad.
To Whom is VAT imposed/ Who are
required to be VAT Registered
Any person or entity who, in the course of his trade or business,
sells, barters, exchanges, leases goods or properties and renders
services subject to VAT, if the aggregate amount of actual gross
sales or receipts exceed One Million Nine Hundred Nineteen
Thousand Five Hundred Pesos (P1,919,500.00)
Any person, whether or not made in the course of his trade or
business, who imports goods
A person required to register as VAT taxpayer but failed to
register
3 Types of VAT and Tax Rates

VAT 12%
VAT Zero Rated
VAT Exempted
VAT 12%
As a rule, gross receipts from services
rendered in the Philippines by a Value
Added Tax registered seller is subject to 12%
value added tax (VAT). Such 12% value
added tax in the Philippines is passed on by
the seller to the buyer of service in the
Philippines.
How do we know if a transaction is subject to
VAT?
It must be done in the ordinary course of the trade or business
There must be a sale, barter, exchange, lease of goods or properties
or rendering a service in the Philippines
It is not VAT exempt or VAT Zero- Rated
Who are subject to Value
added tax of 12%?
Normal VAT Transactions 12%

Persons engaged on sale of goods


and properties (12%) of the gross
selling price or gross value in money of
the goods or properties sold, bartered or
exchanged
Requisites of Taxability of sale of goods or
properties
There is an actual or deemed sale, barter or exchange of goods
or personal properties for valuable consideration;
The sale is in the course of trade or business or exercise of
profession in the Philippines;
The goods or properties are located in the Philippines and are
for use or consumption therein; and
The sale is not exempt from VAT under Section 109 of NIRC,
special law, international agreement binding upon the
government of the Philippines.
Normal VAT Transactions 12%

Persons engaged on sale of services


and use or lease of properties
Twelve percent (12%) of gross receipts
derived from the sale or exchange of
services, including the use or lease of
properties
Requisites for taxability of sale or exchange of
real property
The seller executes a deed of sale, barter or exchange,
assignment, transfer, or conveyance, or merely contract to sell
involving real property
The real property is located within the Philippines;
The seller or transferor is a real estate dealer
The real property is an ordinary asset held primarily for sale or
for lease in the ordinary course of business
The sale is not exempt from VAT under Section 109 of NIRC,
special law, or international agreement binding upon the
government of the Philippines
Normal VAT Transactions 12%
Persons engaged on importation of goods
Twelve percent (12%) based on the total value used by the
Bureau of Customs in determining tariff and customs duties,
plus customs duties, excise taxes, if any, and other charges,
such as tax to be paid by the importer prior to the release of
such goods from customs custody; provided, that where the
customs duties are determined on the basis of quantity or
volume of the goods, the VAT shall be based on the landed
cost plus excise taxes, if any.
What are Zero Rated
Transactions?
VAT Zero-Rated 0%
It is a sale, barter or exchange of goods, properties and/or
services subject to 0% VAT pursuant to Sections 106 (A) (2) and
108 (B) of the Tax Code. It is a taxable transaction for VAT
purposes, but shall not result in any output tax. However, the
input tax on purchases of goods, properties or services, related
to such zero-rated sales, shall be available as tax credit or refund
in accordance with RR No. 16-2005.
VAT Zero-Rated 0%
Processing/ repackaging of goods for export sale
Services rendered to persons engaged in international shipping
or air transport operations
Rendering of services to a foreign entity (performed in the
Philippines), in which consideration will be received in
acceptable foreign currency denomination.
Foreign currency denominated sales
Export sales
Sale to persons or entities who are tax-exempt under Philippine
special laws.
What are the requisites
to be considered as Zero
Rated Transactions?
Jurisprudence

Commissioner of Internal Revenue


(CIR) v. Burmeister and Wain Scandinavian, GR
153205, January 22, 2007
General Motors Automobiles Philippines
Inc. v. CIR, CTA Case 8976, December 2, 2016
Commissioner of Internal Revenue
(CIR) v. Burmeister and Wain Scandinavian, GR
153205, January 22, 2007
1st Requisite: The services must be other than processing,
manufacturing or repacking of goods; -Nature of Services
2nd Requisite: The payment for such services must be in acceptable
foreign currency accounted for in accordance with the Bangko Sentral
ng Pilipinas rules and regulations; and,
3rd Requisite: The recipient of such services must be doing business
outside the Philippines.
General Motors Automobiles Philippines Inc. v. CIR,
CTA Case 8976, December 2, 2016

First requisite can be complied by presenting


the service agreements between the domestic
corporation and the nonresident foreign
corporation, which reflects the nature of the
services to be rendered by the domestic
corporation.
General Motors Automobiles Philippines Inc. v. CIR,
CTA Case 8976, December 2, 2016

With regard to the second requisite, the domestic


corporation must present the Funds Transfer Credit
Advice and Certificate of Inward Remittances issued
by the bank which facilitated the payment, and the
VAT zero-rated official receipts.
General Motors Automobiles Philippines Inc. v. CIR,
CTA Case 8976, December 2, 2016
the third requisite, the CTA appreciated the following documentary evidences
to prove that the recipient of the services is doing business outside the
Philippines: (a) the certification of nonregistration of company issued by the
Securities and Exchange Commission (SEC);
(b) the consularized certificate of residence of the nonresident
foreign corporation authenticated by the Philippine Embassy, or the original
certificate of fesidence issued by the appropriate department of the foreign
government; and
(c) the consularized certificate of registration/incorporation/formation of the
nonresident foreign corporation authenticated by the Philippine Embassy.

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