January 25, November 23, September 3, August 22, Circularizes the full text of Executive Order No. November 8, July 20, Clarifies the coverage of RMO No. July 13, Clarifies Revenue Memorandum Circular No.
September 16, December 3, June 20, April 18, September 14, August 7, June 13, June 30, May 30, May 22, April 6, February 1, January 20, December 22, December 8, November 3, Attachments to the quarterly VAT return to be filed starting October 25, October 20, October 3, July 1, Clarification regarding the withholding of creditable Value-Added Tax by government offices for purchases of P1, September 23, Settlement of the Value-Added Tax liabilities of pawnshops for taxable years to June 16, January 7, January 22, October 8, August 27, December 18, July 2, March 18, Codal Reference.
General VAT Queries. Who are liable to register as VAT taxpayers? Any person who, in the course of trade or business, sells, barters or exchanges goods or properties or engages in the sale or exchange of services shall be liable to register if:. His gross sales or receipts for the past twelve 12 months, other than those that are exempt under Section A to U , have exceeded Three Million Pesos P3,, There are reasonable grounds to believe that his gross sales or receipts for the next twelve 12 months, other than those that are exempt under Section A to U , will exceed Three Million Pesos P3,, When is a new VAT taxpayer required to apply for registration and pay the registration fee?
Thereafter, taxpayers are required to pay the annual registration fee of five hundred pesos P What compliance activities should a VAT taxpayer, after registration as such, do promptly or periodically? The following compliance activities must be performed by a VAT-registered taxpayer:. Pay the annual registration fee of P The monthly VAT Declaration and the Quarterly VAT Return shall reflect the consolidated total for all the taxable lines of activity and all the establishments - head office and branches ;.
What is the liability of a taxpayer becoming liable to VAT and did not register as such? Any person who becomes liable to VAT and fails to register as such shall be liable to pay the output tax as if he is a VAT-registered person, but without the benefit of input tax credits for the period in which he was not properly registered. Who may opt to register as VAT and what will be his liability? Any person who is VAT-exempt under Sec.
Any person who is VAT-registered but enters into transactions which are exempt from VAT mixed transactions may opt that the VAT apply to his transactions which would have been exempt under Section of the Tax Code, as amended. This option, once exercised, shall be irrevocable. Any person who elects to register under optional registration shall not be allowed to cancel his registration for the next three 3 years. The above-stated taxpayers may apply for VAT registration not later than ten 10 days before the beginning of the calendar quarter and shall pay the registration fee unless they have already paid at the beginning of the year.
In any case, the Commissioner of Internal Revenue may, for administrative reason deny any application for registration. Once registered as a VAT person, the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day of the month following registration.
If he makes a written application and can demonstrate to the commissioner's satisfaction that his gross sales or receipts for the following twelve 12 months, other than those that are exempt under Section A to U , will not exceed Three Million Pesos P3,, If he has ceased to carry on his trade or business, and does not expect to recommence any trade or business within the next twelve 12 months. When will the cancellation for registration be effective? The cancellation for registration will be effective from the first day of the following month the cancellation was approved.
A VAT registered person shall issue :. A VAT invoice for every sale, barter or exchange of goods or properties; and. A VAT official receipt for every lease of goods or properties and for every sale, barter or exchange of services. The amount of the tax shall be shown as a separate item in the invoice or receipt.
Name of Seller. Description of the goods or properties or nature of the service. Purchase price plus the VAT, provided that. Authority to Print Receipt Number at the lower left corner of the invoice or receipt. The purchaser shall be entitled to claim an input tax credit on his purchase.
What is "output tax"? 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 of the Tax Code. What is "input tax"? 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 of the Tax Code, presumptive input tax and deferred input tax from previous period. Does amortization of input VAT still allowable? Yes , but is only allowed until December 31, after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized: Provided, That in the case of purchase of services, lease or use of properties, the input tax shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee.
What will be the basis of the date of cancellation? It is the date of issuance of tax clearance by the BIR, after full settlement of all tax liabilities relative to cessation of business or change of status of concerned taxpayer. What comprises "goods or properties"?
The term "goods or properties" shall mean all tangible and intangible objects, which are capable of pecuniary estimation and shall include, among others:. Real properties 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 privilege to use in the Philippines of any industrial, commercial or scientific equipment;. The right or the privilege to use motion picture films, films, tapes and discs; and.
Radio, television, satellite transmission and cable television time. What comprises "sale or exchange of services"? The term "sale or exchange of services" means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, whether in kind or in cash, including those performed or rendered by the following:. Stock, real estate, commercial, customs and immigration brokers;. Persons engaged in milling, processing, manufacturing or repacking goods for others;.
Proprietors, operators or keepers of hotels, motels, rest houses, pension houses, inns, resorts, theatres, and movie houses;. Proprietors or operators of restaurants, refreshment parlors, cafes, and other eating places, including clubs and caterers;.
Transportation contractors on their transport of goods or cargoes, including persons who transport goods or cargoes for hire and other domestic common carriers by land relative to their transport of goods or cargoes;.
Common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines;. Non-life insurance companies except their crop insurances , including surety, fidelity, indemnity and bonding companies; and. Similar services regardless of whether or not the performance thereof calls for the exercise of use of the physical or mental faculties. The phrase "sale or exchange of services" shall likewise include:.
The lease of use of or the right or privilege to use any copyright, patent, design or model, plan, secret formula or process, goodwill, trademark, trade brand or other like property or right;. The lease or the use of, or the right to use of any industrial, commercial or scientific equipment;.
The supply of scientific, technical, industrial or commercial knowledge or information;. The supply of any assistance that is ancillary and subsidiary to and is furnished as a means of enabling the application or enjoyment of any such property, or right or any such knowledge or information;. The supply of services by a nonresident person or his employee in connection with the use of property or rights belonging to, or the installation or operation of any brand, machinery or other apparatus purchased from such non-resident person;.
The supply of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme;.
The lease of motion picture films, films, tapes and discs; and. The lease or the use of or the right to use radio, television, satellite transmission and cable television time. What is a zero-rated sale? 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 existing regulations.
What transactions are considered as zero-rated sales? Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas BSP ;. Services other than processing, manufacturing or repacking rendered to a person engaged in business conducted outside the Philippines or to a non-resident person engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas BSP ;.
Services rendered to persons engaged in international shipping or air transport operations, including leases of property for use thereof; Provided, that these services shall be exclusively for international shipping or air transport operations.
Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country. Sales tax is collected by the retailer when the final sale in the supply chain is reached.
In other words, end consumers pay sales tax when they purchase goods or services. When buying supplies or materials that will be resold, businesses can issue resale certificates to sellers and are not liable for sales tax. Until the sale is made to the final consumer, sales tax is not collected, and tax jurisdictions do not receive tax revenue. VAT , on the other hand, is collected by all sellers in each stage of the supply chain.
Suppliers, manufacturers, distributors, and retailers all collect VAT on taxable sales. Similarly, suppliers, manufacturers, distributors, retailers, and end consumers all pay VAT on their purchases. Businesses must track and document the VAT they pay on purchases to receive a credit for the VAT paid on their tax return. Under a VAT regime , tax jurisdictions receive tax revenue throughout the entire supply chain, not just at the point of sale to the final consumer.
Before the South Dakota v. Sales tax automation software can help you understand and determine if you have met the nexus threshold. For both sales tax and VAT , the seller is responsible for collecting the tax and remitting to the appropriate tax authority, although there are cases where the buyer must recognize the tax instead.
It pays 10 cents of the VAT to the government. The other 20 cents reimburse the cell phone manufacturer for the VAT it has paid to the electronic components manufacturer. The standard VAT in the U. There is no VAT on some items such as food and children's clothing.
Financial and property transactions also are exempt. Those who favor value-added taxation argue that a VAT system discourages attempts to avoid taxes. The fact that VAT is charged and recorded at each stage of production rewards tax compliance and acts as a disincentive to operating in the underground market. For manufacturers and suppliers to be credited for paying VAT on their inputs, they are responsible for collecting VAT on their outgo: the goods they create or sell.
Retail businesses have an incentive to collect the tax from their customers since that is the only way for them to obtain credit for the VAT they had to pay in buying their goods wholesale. A VAT is also arguably better than so-called hidden taxes. These are the taxes that consumers pay without entirely being aware of them, such as taxes on gasoline and alcohol.
In the U. Because they are levied at the same percentage on many or most products and services, a VAT is seen as having less of an impact on individual economic decisions than an income tax. Still, it can register on a country's economy. A VAT is considered an effective way to improve the growth of a nation's gross domestic product GDP , raise tax revenues, and eliminate government budget deficits.
Opponents of VAT argue that it unfairly burdens people with lower incomes. Unlike a progressive income tax such as the U. In an attempt to reduce this income inequality, most countries that have VAT, including Canada and the U. Government of Canada. Income Tax. Small Business. Actively scan device characteristics for identification.
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