5.0 VALUEADDED TAX (VAT AND PERCENTAGETAX).docx - 5...

 5 VALUEADDED TAX (VAT AND PERCENTAGETAX)
5.1 Describe, analyse and compute value added tax
Output VAT
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 VAT
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.
VAT tax credits
A VAT-registered person is entitled to credit input taxes evidenced by
VAT invoices or official receipts issued in accordance with Sections 113
and 237 of the NIRC on the following against his/her output tax:
1. Purchase or importation of goods:
a. For sale; or
b. For conversion into or intended to form part of a finished product for
sale including packaging materials; or
c. For use as supplies in the course of business; or
d. For use as raw materials supplied in the sale of services; or
e. For use in trade or business for which deduction for depreciation or
amortization is allowed under the Tax Code187;
2. Purchase of real properties for which a VAT has actually been paid;
3. Purchase of services in which a VAT has actually been paid;
4. Transactions “deemed sale” under Section 106(B) of the Tax Code;
5. Transitional input tax allowed under Section 4.111 (a) of RR 16-2005;
6. Presumptive input tax allowed under Section 4.111 (b), supra; and
7. Transitional input tax credits allowed under the transitory and other
provisions, supra.
G. MANNER OF COMPUTING THE VAT
The tax is computed in the following manner:
1. Output tax exceeds total input tax.
Output Tax xxx
Less: Input Tax (xxx)
VAT Payable xxx
2. Input tax total exceeds output tax
Output Tax xxx
Less: Input Tax* (xxx)
VAT Payable (xxx)
* The unutilized input tax can be carried over to the succeeding month/
quarter.
Input VAT allowed for tax refund or tax credit certificate in Philippines
Refund of excess input VAT
Under the VAT rules in the Philippines, only selected sources or
transactions are allowed for VAT refund or tax credit certificates. Here
are those allowed for tax refund or tax credit application: