VALUE ADDED TAX

I. VATable or not?

1. Sale of Copra
2. Sale of Bonsai
3. Sale of wood
4. Sale of barbeque
5. Sale of Tilapia

II. Business Taxes of Domestic Common Carriers

1. Transport of Passenger by Land

2. Transport of Goods/Cargoes by Land
3. Transport of Passenger by air or sea
4. Transport of Goods/Cargoes by air or sea
5. International flights/shipments

III. Ana was delighted after spending a well-deserved summer vacation in Palawan. However, due
to high temperature brought about by the weather and fatigue, she suddenly felt wobby. She
consulted a doctor upon arrival in Manila. For a better assessment of her condition, she was
advised to undergo some laboratory tests and other medical procedures in a prominent hospital in
Taguig. The following were incurred by Ana:

Doctor’s consultation fee P50,000

Various laboratory fees in the hospital 240,000
Medicines purchased from the hospital’s pharmacy 120,000

Subject to VAT?
1. Gross receipts by ABC University, a proprietary educational institution registered under
CHED
2. Gross receipts by a review school offering CPA review course

IV. Benguet Agri Coop is a duly registered agricultural cooperative engaged in growing abaca and
production of bags made of abaca. It is also engaged in the sale of other kitchen kits made of
rattan from other cooperatives and traders. The following data for the year were provided:

To members To non-members

Sale of abaca bags 6,000,000 4,000,000

Sale of kitchen kits 2,000,000 3,000,000

How much is VAT payable?

V. Coop Natin is a duly registered non-agricultural, non-electric, and non-credit cooperative

founded and operated by the employees of Chriska Group of Companies with maximum
contribution of P15,000 each. The cooperative is duly registered with the CDA. The following data
were provided for the taxable year (net of applicable taxes)

Sales P5,000,000
Purchases 1,000,000

1. What is the correct amount of vat payable, if any?

2. Assume further that Coop Natin imported equipment valued at P1M for its own use. What
amount, if any should be recognized as liability for vat?

VI. Subject to tax?

1. Sale of a parcel of Land held as capital asset
2. Sale of a parcel of Land not ordinarily held for sale to customers but is used in business
operations
3. Sale of “commercial lot” ordinarily held for sale in the course of trade or business
4. Sale by a real estate dealer of “residential lot” ordinarily held for sale in the course of trade
or business
5. Sale of condominium unit for P3,199,200
6. Sale of parking space in condo unit for 800,000

Which of the following 2021 transactions by a property developer is subject to VAT?

VII. Subject to VAT?

1. Lease of commercial units in Makati for P15,000 per unit per month. Gross receipts during
the year was P2,200,000. The developer is a vat registered entity.
2. Lease of residential units in Makati for P15,000 per unit per month. The aggregate gross
receipts of the lessor during the year was P5,000,000
3. Lease of residential units in Makati for P20,000 per unit per month. The aggregate gross
receipts of the lessor was P5,000,000
4. Lease of several residential units in Makati with the following details

Monthly rent Annual Gross Receipts

12,000 3,200,000

16,000 2,800,000

VIII. Alpha Corporation, a vat registered taxpayer made the following acquisition of capital goods
from VAT registered suppliers (net of vat) during 2021:
Purchase date Acquisition Cost Estimated life (Yrs)

January 1** 1,000,000 10

15 500,000 2

March 2 200,000 6

20 300,000 2

October 6 600,000 4
 30 800,000 6

December 25 3,000,000 1

**The asset was sold in December 2021

1. Creditable input vat for the month of January

2. Creditable input vat for the month of March

IX. Taxpayer is a Vat registered person. Importations were for sale in the ordinary course of trade
or business and for personal use (amounts are exclusive of vat).

For sale For personal use

Invoice cost (exchange rate is $150,000 $2,000

$1 : P40)

Expenses based on invoice

cost:

● Freight and insurance 5% 5%

● Other expenses up to 5% 5%
the point of removal
from customs house

● Transfer expense from 5% 5%

custom’s house to
warehouse in Isabela

Proceeds from the sale of goods imported amounted to P10,000,000.

How much is the vat payable?

X. Minola Company, manufacturer cooking oil made of corn, has the following data for the month:

Sales, (net) P10,000,000

Purchases, corn 2,000,000

Purchases, tin 250,000

Purchase of wrapping supplies, (net) 200,000

Purchase of labels (net) 125,000

Determine the vat payable of Minola

OTHER PERCENTAGE TAXES

1. Dealer of specialty feeds with annual gross sales of: a) 2.5M; b) 2.5M and vat
registered; c) P5M
Case A.
ABC Trading Corporation (non-vat registered) is a trader of electronic products. Data for
the year 2021 were provided as follows:

Gross receipts P1,800,000

Purchases on account from vat supplier 1,200,000

(net)

Payments made to vat suppliers 800,000

Purchases on account from non-vat 200,000

suppliers

Payments made to non-vat suppliers 80,000

Operating expenses 400,000

What is the applicable business tax?

Assuming opted to register under VAT system?
Case B.
Pedro is engaged in the following during 2021 taxable year; Trucking business (Gross
receipts P1,600,000), Lease of apartments (monthly rental is P14,500 per unit, annual
gross receipts P1,200,000), Practice of accountancy, gross receipts P900,000. What is
the applicable business tax?

Case C.
Victory Express is a domestic common carrier by land engaged mainly in the transport of
passengers in Luzon areas. Due to the increasing demand to transport goods/cargoes,
the company decided to acquire additional bus units exclusively intended for this
purpose. The Company is non-vat registered. The results of operations for the calendar
year 2021 are as follows:
Gross receipts – transport of passengers P50,000,000

Gross receipts – transport of goods 15,000,000

Purchases – Supplies and services 12,000,000

Other operating expenses 3,000,000

What amount should be recognized as common carriers tax?

What amount should be recognized as output vat?
Assume that Victory’s gross receipts from the transport of “goods” amounted to
P1,500,000 only. What amount should be recognized as business taxes?

Case C.
An international air carrier provided the following data for the current year:
 Gross receipts – transport of passengers 12,000,000
(Phil to Canada)

Gross receipts – transport of passengers 8,000,000

(Canada to Phil)

Gross receipts – transport of 6,000,000

goods/cargoes (Phil to Canada)

Gross receipts – transport of 4,000,000

goods/cargoes (Canada to Phil)

Purchases (supplies net of vat) 7,500,000

Other operating expenses 6,000,000

How much is the applicable business?

What is the applicable income tax rate?
How much is the income tax due assuming the international carrier is neither subject to a
preferential tax rate nor exemption from income tax?
How much is the income tax due assuming the international carrier is neither subject to a
preferential tax rate of 1.5% on GBP under an existing tax treaty or international
agreement?
How much is the income tax due assuming the international carrier is exempt from
income tax based on reciprocity?

Case D.
WITTY Communications provided the following data from its 2021 operations:
Gross receipts – local calls P50,000,000

Gross receipts – Overseas calls 20,000,000

Purchases (supplies, net) attributed to 10,000,000

local calls

Purchases (supplies, net) attributed to 10,000,000

both local and overseas calls

Other operating expenses 10,000,000

How much is the overseas communications tax?

What should be the responsibility of Witty Communication with respect to the payment of
OCT as computed in #1?
What amount should Witty recognized as vat payable?

Case E.
ABC Company, a domestic insurance company gave the following data for the month:
Gross receipts from its insurance policies

Premium on life insurance P2,100,000

 Premium on non-life insurance 1,500,000

Gross receipts as agent of a foreign insurance company

Premium on property insurance 4,000,000

Premium on other non-life insurance 1,000,000

How much is the premiums tax payable of ABC Company?

How much is the total business taxes of ABC Company?

Case F.
Apol B is the operator of Golden Apol Coliseum. During the month it had the following
gross receipts from various activities:
Income from the concert of Isang P2,000,000
direksyon

Professional basketball game 3,000,000

Ka Emong Super Derby (cockfighting) 5,000,000

How much is the amusement tax payable of Apol B?

Case G
Mr. Mananaya had the following records of his winnings from horse races for the month:
Type of Winnings Gross Winnings Cost of Winnings

Trifecta P100,000 P50,000

Ordinary 300,000 100,000

Double 50,000 10,000

Ordinary 75,000 25,000

How much is the business tax on winnings?

Case H.
In 2021, George sold 2,000 shares of a domestic corporation in a local stock exchange at
110 per share. The shares were acquired at P100 per share three years ago.

How much is the final income tax (cap gains tax) on the sale of shares?
How much is the income subject to basic or ordinary tax?
How much is the business tax due?
Assume Goerge is a dealer in securities, how much is the applicable business tax due?