Big Picture in Focus: ULOa.

Apply taxation rules in determining

value added tax

Topic: Value- Added Tax (VAT)

*
Week 8-9 : Unit Learning Outcomes (ULO): At the end of the unit, you are expected to:
a. Identify transactions to subject to VAT.
b. Identify VAT-Exempt transactions.
c. Compute value added tax payable.

Nature and Concept of Business Taxes

Business taxes are imposed upon onerous transfers such as sale, barter or exchange. But
a person may, although not engaged in business, be subject to business tax.

Under the Tax Code, the 3 major business internal revenue taxes are:
1. Value – Added Taxes
2. Percentage Taxes
3. Excise Taxes

Value-Added Tax
• is a tax on the value added to the purchase price or cost in the sale or lease of
goods, property or services in the course of the trade or business in the
Philippines.
• is an indirect tax that may be shifted or passed on to the buyer, transferee or
lessee of the goods, property or services.

• Every person who, in the course of trade or business, sells, barters, exchanges,
leases goods or property, or renders services is subject to 12% VAT, if the
aggregate of his actual or expected gross sales and/or gross receipts exceeds
P3,000,000.00
• any person who imports goods is likewise subject to VAT.

• The phrase” in the course of trade or business” means regular conduct or

pursuit of a commercial or economic activity, including transactions incidental
thereto by any person regardless of whether or not the person engaged therein
is a non-stock, non-profit private organization or government entity.

• For as long as a government entity sells, barters, exchanges, leases goods or

property, or renders services in the course of trade or business, it is required to
register as a VAT taxpayer (BIR Ruling 60-2000

• For as long as a government entity sells, barters, exchanges, leases goods or

property, or renders services in the course of trade or business, it is required to
register as a VAT taxpayer (BIR Ruling 60-2000)
 • Generally, services rendered in the Philippines by a non-resident foreign person
shall be considered as being rendered in the course of trade or business even
if the performance of services is not regular and such services are therefore
subject to VAT.

• Non-resident corporations deriving income from services rendered abroad are

not subject to Philippine income tax and, likewise, not subject to VAT

VAT on Sale of Goods or Property

Goods or property shall mean all tangible and intangible objects that are capable of pecuniary
estimation and shall include:

1. Real property held primarily for sale to customers or lease in the ordinary course of
business.
2. The right or privilege to use patent, copyright, design or model and other intangible
property.
3. The right or the privilege to use in the Philippines of any industrial, commercial or scientific
equipment.
4. The right or privilege to use motion picture films, films, tapes and discs.
5. Radio, television, satellite transmission and cable television time.

Sale of goods or property shall be subject to 12% VAT based on the gross selling price.

Gross selling price is the total amount of money or its equivalent, which the purchaser pays
or is obligated to pay to the seller in consideration of the sale, barter or exchange of the goods
or properties, excluding the VAT.
Excise Tax, if any, on such goods or property shall form part of the gross selling price.

Tax rate and tax base

There shall be levied, assessed and collected on every sale, barter or exchange of
goods or properties, a value-added tax equivalent to twelve percent (12%) of the gross selling
or gross value in money of the goods or properties sold, bartered or exchanged, such tax to
be paid by the seller on transferor.
The tax base refers to the amount on which the twelve percent (12%) rate of value-
added tax is applied.
Thus, if the seller sells goods (in cash or on account) amounting to P100, 000
(excluding the tax), this amount will serve as the tax base in computing the tax.
The amount of value-added tax (output tax on the seller and input tax on the buyer) is
computed as follows:
1. If the amount includes the tax – multiply by 3/28.
VAT (P112, 000x3/28) =P12, 000
2. If the amount does not include the tax- multiply by 12%.

Common query from the students: “For purpose of computing the value-added tax, when
shall we multiply the tax base by 12% or by 3/28?
Answer:
 The tax base shall be multiplied by 3/28 if the problem states that the amounts are:
“inclusive of tax”, VAT inclusive” or other similar terms.
It shall be multiplied by 12% if the problem indicates that the amounts are: “taken from
the books”, “exclusive of tax”, “VAT/tax not included”, “gross selling price”, gross receipts”
and other similar terms.

Deduction from gross selling price

The following shall be allowed as deductions from gross selling price in computing the
tax base during the month or quarter:
1.) Sales returns and allowances for which a proper credit or refund was made during the
month or quarter to the buyer for sales previously recorded as taxable sales.
2.) Sales discounts- Discounts determined and granted at the time of sale, which are
expressly indicated in the invoice, the amount thereof forming part of the gross sales
duly recorded in the books of accounts.
Sales discounts indicated in the invoice at the time of sale, the grant of which is not
dependent upon the happening of a future event, may be excluded from the gross sales
within the same month/quarter it was given.

ILLUSTRATION
The following data were taken from the books of Tiberio Company during the month
of April of the current year:
Cash sales P 453,200
Sales on account 565,800
sales returns and allowances 31,548
Sales discount 35,250

REQUIRED: Compute for the gross selling price and the tax base.
Cash sales P453,200
Sales on account 565,800
Gross selling
price 1,019,000
Less: Deductions
Sales returns and
allowances P31,548
sales
discounts 35,250 66,798
Tax base 952,202

1.) Gross selling price includes all sales made during the period whether cash sales on
account.
2.) Sales discounts shall only be allowed as deduction from gross selling price if it is
indicated in the sales invoice.
3.) In the absence of sales returns and allowances and sales discounts, the tax base shall
be the gross selling price.
Determination of the tax
The 12% tax shall be computed by multiplying the total amount in the invoice by 3/28.
The VAT payable is determined by deducting the input tax from the output tax.

Thus, the formula in computing VAT payable is:

Output tax PX X

Less: Input tax XX

VAT payable XX

Output tax is defined as the value-added tax due on the sale or lease of taxable goods or
properties or services by any person registered or required to register under the Tax Code.
It is also called Output VAT.
Input tax refers to the value-added tax from or paid by a VAT registered person in the
course of his trade or business on importation of goods or local purchase of goods or
services, including lease or use of property, from a VAT registered person. It is also called
Input VAT.
VAT payable refers to the excess of the output tax over the allowable in put tax. In the
case of importation, it is the value-added tax due on such importation.

ILLUSTRATION
Teendera, a VAT registered taxpayer, sold to Mommy Mely certain pieces of
merchandise. The amount indicated in the invoice is P6, 720. Subsequently, Mommy Mely
sold the same goods to Papa Billy for P11, 200, who later on sold them to Vi Belly, the ultimate
consumer, P17, 920.

REQUIREMENTS:
1.) Record the journal entries in the sales book of Teendera.
2.) Record the accounting entries in the purchase and sales books of Mommy Mely.
3.) Compute the VAT payable by Mommy Mely.
4.) Record the accounting entries and the VAT payable by Papa Billy.
5.) What is the tax consequence on Vi Belly, the ultimate consumer.

1.) To record the accounting entries in the book of Teendeera.

Cash/Accounts receivable P6,720
Sales P6,000
Output tax(6,720x3/28) 720

2.) To record the accounting entries:

A. In the purchase book of Mommy Mely.

Purchases 6,000
Input tax 720
 Cash/Accounts payable 6,720

B. In the sales book of mommy Mely

Cash/Accounts receivable 11,200

Sales 10,000
Output tax 1,200

3.) To compute the VAT payable by Mommy Mely.

Output tax P1,200

Less: Input tax 720
VAT payable 480

4.) To record the accounting entries.

A. In the purchase book of Papa Billy.

Purchases 10,000
Input tax 1,200
Cash/Accounts payable 11,200

B. In the sales book of Papa Billy.

Cash/Accounts receivable 17,920

Sales 16,000
Output tax
(17,920 x 3/28) 1,920

Computation Of VAT payable by Papa Billy:

Output tax P1,920

Less: Input tax 1,200

VAT payable 720

1.) The excess of output taxes over the input taxes in a month is the value-added tax
payable by the taxpayer for the month.
2.) Any excess of the input taxes over the output taxes in a quarter shall be available for
carry-over as credit in the succeeding months or quarter.

5.) Value-added tax is a tax on consumption. The seller is the one statutorily liable for
the payment but the amount of the tax may be shifted or passed on to the buyer.

Being the ultimate consumer, Vi Belly shall assume the tax burden because
she cannot pass it anymore to another. Thus, upon purchase she is bound to shoulder
the tax of P1, 920
 The following sale by VAT-registered person shall be subject to Zero-rate:
a. Export Sales
i. The sale and actual shipment of goods from the Philippines to a foreign
country.
ii. Sale of raw materials or packaging materials to a nonresident buyer for
delivery to a resident local export-oriented enterprise.
iii. Sale of raw materials or packaging materials to export-oriented enterprises
whose export sales exceed 70% of total annual production.
iv. Those considered export sales under the Omnibus Investment Code of
1987 (E. O. No. 226) and other special laws, e.g., sales to diplomatic
missions and other agencies and/or instrumentalities granted tax
immunities.
v. Sale of goods, supplies, equipment and fuel to persons engaged in
international shipping or international air transport operations.

b. Foreign currency denominated sale

i. It means sale to a nonresident of goods (except automobiles and
nonessential goods) assembled or manufactured in the Philippines for
delivery to a resident in the Philippines.

c. Effectively zero-rated sales

- Effectively zero-rated sales of goods and properties shall refer to the local sale
(constructive export) by a VAT-registered person to a person or entity who was
granted indirect tax exemptions under special laws or international agreement,
such as:
i. Sale to Asian Development Bank (ADB);
ii. Sale to International Rice Research Institute (IRRI);
iii. Sale to duly registered and accredited enterprises with Subic Bay
Metropolitan Authority (SBMA); and
iv. Sale to duly registered and accredited enterprises with Philippine Economic
Zone Authority (PEZA).

Zero-rated sale of goods and properties by a VAT-registered person is a taxable transaction

for VAT purposes, but shall not result in any output tax.

(VAT-exempt is different from Zero-rated in as much as Zero-rated VAT registered taxpayer

cannot charge output vat but can claim input vat, while vat-exempt cannot claim input vat

Deemed Sale Transactions

a. Transfer, use or consumption not in the course of trade or business of goods or
properties originally intended for sale or for use in the course of trade or
business;
b. Consignment of goods if not sold within 60 days following the date of
consignment;
c. Distribution or transfer to creditors in payment of debt or dacion en pago;
d. Distribution or transfer to shareholders or investors as share in the profit; and
 e. Retirement from or cessation of business or incorporation of single proprietorship
with respect to all goods on hand, whether capital goods, stock in trade, supplies
or materials, as of the date of such retirement, cessation or incorporation,

Notes: The tax base for deemed sale transactions would be the lower of (a)
acquisition cost or (b) the current market price. Where the gross selling price
is unreasonably lower than the actual market value, the appropriate tax base shall
be determined by the Commissioner. The gross selling price is unreasonably
lower than the actual market value if it is lower by more than 30% of the actual
market value of the same goods of the same quantity or quantity sold in the
immediate locality on the the nearest date of sale.

f. Transfer of assets as a result of merger or consolidation are not considered as

deemed sale transaction. However, the unused input tax of the dissolved
corporation, as of the date of merger or consolidation, shall be absorbed by the
surviving corporation.
ILLUSTRATION
Antonio is engaged in a merchandising business. His sales invoice and other data during the
month of January are shown below:
Cash P784,000
Goods consigned:
January 10 of the current year P265,000
November 10 of the preceding year 16,800
Goods taken for personal use 17,920
Goods taken as payment to creditors 24,640
Purchase of merchandise 728,000
Purchase of supplies 89,600

REQUIRED: Compute the following:

a. Output tax
b. Input tax
c. VAT payable

Cash sales 784,000

Consigned goods 16,800
Goods taken for personal use 17,920
Payment to creditors 24,640
Total 843,360
Multiply by '3/28
Output taxes 90,360
Less: Input taxes
Merchandise 728,000
Supplies 89,600
Total 817,600
 Multiply by '3/28 87,600
VAT payable 2,760

Sale of Properties
1. Sale of real property classified as capital asset is not subject to VAT. Such
transaction is subject to capital gains tax of 6% based on sales price or FMV,
whichever is higher.
2. In general, sale of real property primarily held in the normal course of business
(inventory/ordinary asset) is subject to VAT, except:
a. Residential lot with selling price of P 1,500,000 and below; and
b. Sale of house and lot and other residential dwellings with selling price at P
2,500,000 and below.

3. Sale of real properties in the course of trade or business

c. On installment plan (initial payments do not exceed 25% of the gross selling
price)
Installments received Xxx
Add:
Interest Xxx
Other charges Xxx Xxx
Tax base Xxx
Note: Upon full payment, if the zonal or market value is higher than the total
receipts or collections, the additional VAT shall be paid accordingly.
d. On cash basis or deferred payment plan (initial payments exceed 25% of the
gross selling price)
The tax base shall be the higher between SELLING PRICE stated in the sales
document and ZONAL OR MARKET VALUE.
Notes:
a. If the gross selling price is the zonal or market value of the real property, the
zonal or market value shall be deemed inclusive of the VAT.
b. If the VAT is not billed separately, the selling price stated in the sales document
shall be deemed inclusive of the VAT.
ILLUSTRATION

Bahay Kubo Inc. is a real estate dealer. Details of its sales during the year showed the
following:
Date of sale June 2,2018
Consideration in the deed of sale P5,000,000
Fair market value in the assessment rolls 4,800,000
Zonal Value 5,200,000
Schedule of payments:
June 2,2018 1,000,000
June 2,2019 2,000,000
June 2,2020 2,000,000
Determine the output tax on June 2, 2019

Ratio of initial payment over SP=1/5=20%

Type of Sale=installment Sale
Output Vat June 2, 2019=2/5x5,200,000x12%=P249,600

Advance VAT on the Transport of Naturally Grown and Planted Timber Products

An advance VAT is imposed on the transport of naturally grown and planted timber products
and is determined by applying the 12% VAT rate on the value per cubic meter of the different
species of naturally grown and planted timber products in accordance with the schedule as
provided in Revenue Regulations 13-2007.
Advance VAT on the Sale of Refined Sugar

An advance VAT is imposed on the sale of refined sugar and shall be paid by the owner/seller
to the RDO of the BIR before any refined sugar can be withdrawn from any sugar refinery/mill.
(RR 13-2008, sec. 3)

Persons or firms engaged in the production and manufacturing of refined sugar for their own
account shall be allowed a presumptive input tax, which is creditable against the output tax,
equivalent to 4% of the gross value in money of their purchases of primary agricultural
products which are used as inputs to their production.

Advance VAT on the Sale of Flour Milled from Imported Wheat

The VAT on the sale of flour milled from imported wheat shall be paid by the flour miller prior
to the release from the BOC’s custody of the wheat which is imported and declared for flour
milling.

The amount of advance VAT payment shall be determined by applying the 12% VAT on the
tax base as follows:
a. For wheat imported by flour millers – 75% of the sum of:
b. The invoice value multiplied by the currency exchange rate on payment date
c. Estimated customs duties and other charges prior to the release of the imported wheat
from customs custody
d. 5% of the sum of (a) and (b)

For wheat purchased from traders – 75% of the sum of:

a. The invoice value
b. Estimated freight expenses
c. 5% of the sum of (a) and (b)

VAT on sale of Services and Use or Lease of properties

The phrase “sale or exchange of services” means the performance of all kinds of services in
the Philippines for others for a fee, remuneration or consideration, including those performed
or rendered by:
a. Construction and service contractors
b. Stock, real estate, commercial, customs and immigration brokers
 c. Lessors of property
d. Warehousing services
e. Proprietors or operators of restaurants, refreshment parlors, cafes and other eating
places.
f. Dealers in securities
g. Lending investors
h. Transport contractors on their transport of goods or cargoes
i. Sale of electricity by generation, transmission and distribution companies
j. Non-life insurance companies
k. Pre-need companies
l. Similar services regardless of whether or not the performance thereof calls for the
exercise or use of physical or mental faculties

Their shall be levied, assessed and collected, a value – added tax equivalent to 12% of the
gross receipts, excluding the VAT, derived from the sale or exchange of services, including
the use or lease of properties.

Gross receipts –
means the total amount of money or its equivalent representing the contract price,
compensation, service fee, rental or royalty, including the amount charged for materials
supplied with the services and deposits applied as payments for services rendered and
advanced payments actually or constructively received during the taxable period for the
services performed or to be performed for another person, excluding VAT.

Zero – Rated Sale of Services:

In general, a zero-rated sale of services (by a VAT-registered person) is a taxable transaction

for VAT Purposes, but shall not result to any output tax. However, the input tax on purchase
of goods, properties or services related to such zero-rated sale shall be available as tax credit
or refund in accordance with regulations.

1. Processing, manufacturing or repacking goods and other services performed for other
persons doing business outside the Phil. or to a non-resident person not engaged in trade
or business, which goods are subsequently exported, where the services are paid for in
foreign currency and accounted for in accordance with the rules & regulations of the BSP.
2. Services rendered to persons or entities whose exemption under special laws or
international agreements to which the Phil. is a signatory.
3. Services rendered to persons engaged in international shipping or air transport
operations, including leases of property for use thereof.
4. Services performed by sub/contractors duly accredited by either the BOI or the EDC in
processing, converting or manufacturing goods for an enterprise whose export sales
exceed 70% of the total annual production.
5. Transport of passengers and cargo by domestic air or sea carriers from the Phil. to a
foreign country.
6. Sale of power or fuel generated through renewal sources of energy such as biomass,
solar, wind, hydropower and other energy sources using tech. such as fuel cells &
hydrogen fuels; provided, zero-rating shall apply only to such services

Exempt Transactions
This means that the sale of goods or services and the use or lease of properties are not
subject to VAT ( outut tax) and the seller or lessor is not allowed to any tax credit on VAT (
input tax) on purchases.

The following are VAT- exempt transactions

1. Sale or importation of
a. Agricultural marine food product in their original state;
b. Livestock and poultry used as, producing goods for human consumption
c. Breeding stock and genetic materials
Products considered in their original state:
a. Products which undergone simple processes or preparation or preservation for
the market (freezing, drying, salting, broiling,roasting, smoking or stripping)
b. Polished or husked rice
c. Corn grits
d. Raw cane sugar and molasses
e. Ordinary salt
f. Copra
Note: Livestock does not include fighting cocks race horses, zoo animals, and other animals
generally considered as pets.

2. Sale or importation of
a. Fertilizers
b. Seeds, seedlings, and fingerlings
c. Fish prawn, livestock and poultry feeds
d. Ingredients used in the manufacture or finished feeds,( except specialty feeds
for race horses, fighting cocks, aquarium fish, zoo animals, and other animals
generally considered as pets.)
3. Importation of personal and household effects belongings to the:
a. Residents of the Philippines returning from abroad; and
b. Non-resident citizens coming to resettle in the Philippines
Note: such goods must be exempt from custom duties
4. Importation of professional instruments and implements, tools of trade, occupation or
employment, wearing apparel, domestic animals, and personal household effects,
provided:
a. It belongs to persons coming to settle in the Philippines, or Filipinos or their
families and descendants who are now residents or citizens of other countries
such parties herein transferred to as overseas Filipinos;
b. In quantities and of the class suitable to the profession, rank or position of the
persons importing said items;
c. For their own use and not for sale, barter or exchange;
d. Accompanying such persons, or arriving within a reasonable time. Provided
that, the Bureau of Customs ma, upon production of satisfactory evidence that
such persons are actually coming to settle in the Philippines and that the goods
from payment of duties and taxes. Provided, further, vehicles, vessels,
aircrafts, and machineries and other similar goods for use in the manufacture
and shall not fall within this classification and shall therefore be subject to
duties, taxes and other charges.
5. Services subject to percentage tax
6. Service by agricultural growers and milling for others of palay into rice, corn into grits,
and sugar cane into raw sugar;

7. Medical, dental, hospital and veterinary services except those rendered by

professionals
Note:
• Laboratory services are exempted. If the hospital or clinic operates a
pharmacy or drugstore, the sale of drugs and medicines are subject to VAT
• Hospital bills constitute medical services. The sale made by the drugstore
to the in-patients are included in the hospital bills are part of medical bills
(not subject to VAT)
• The sales of the drugstore to the out-patients are taxable because they are
not part of medical services of the hospital

1. Educational services rendered by:

a. Private educational institution, duly accredited by:
i. Department of Education (DepEd)
ii. Commission on Higher Education ( CHED)
iii. Technical Education and Skills Development Authority ( TESDA)
b. Government Educational Institutions

2. Services rendered by individuals pursuant to an employer-employee relationship

3. Services rendered by regional or area headquarters

4. Transactions which are exempt under international agreements to which the

Philippines is a signatory under special laws

5. For agricultural cooperatives:

a. Sales to their members
b. Sales to non-members if the cooperative is the producer ( if not, subject to
VAT)
c. Importation of:
• Direct farm inputs, machineries and equipment, including spare parts
thereof
• To be used directly and exclusively the in the production and/or
processing of their products
6. Gross receipts from lending activities by credit or multi-purpose cooperatives
Gross Receipts Tax
Gross receipts from lending activities to its members Exempt
Gross receipts from lending activities to non-members Exempt
Gross receipts from non-lending activities to its member and non- Subject
members to VAT

7. Sales by non-agricultural, non-electric and non-credit cooperatives provided, that the

share capital contribution of each member does not exceed P 15,000
Note: Importation by non-agricultural, non-electric and non-credit cooperatives of
machineries and equipment including spare parts thereof, to be used by them are
subject to VAT.
8. Export sales by persons who are not VAT- registered

9. Sale of:
a) Real properties not primarily held for sale to customer or held for lease in the
ordinary course of trade or business. However, even if the real property is not
primarily held for sale to customer or held for lease in the ordinary course of trade
or business but the same is used in trade or business of the seller, the sale thereof
shall be subject to vat being a transaction incidental to the taxpayer’s main
business.
b) Real property utilized for low-cost housing as defined under R.A No.7279,
otherwise known as the “Urban Development and Housing Act of 1992” and other
related laws.
c) Real property utilized for “socialized housing” as defined by Republic Act No.7279,
and other related laws such as R.A No. 7835 and R.A 8763, wherein the price
ceiling per unit is P450,000 or as may from time to time be determined by HUDCC
and the NEDA and other related laws.
d) Real properties primarily held for sale to customers or held for lease in the ordinary
course of trade or business, if:
i. Residential lot valued at:
▪ Prior to Jan.1,2018: P1,919,500 and below;
▪ Beg. Jan.1,2018 (TRAIN Law): P1,500,000
ii. House and lot, and other residential dwellings valued at:
▪ Prior to Jan.1,2018:P3,199,200 and below;
▪ Beg. Jan1,2018 (TRAIN Law): P2,500,000
Note:
✓ If two or more adjacent residential lots are sold or disposed in favor of one
buyer, for the purpose of utilizing the lots as one residential lot, the sale shall
be exempt from vat only if the aggregate value do not exceed P1,500,000 (as
amended). Adjacent residential lots, although covered by separate titles and/or
separate tax declaration, when sold to one and the same buyer, whether
covered by one separate Deed of Conveyance, shall be presumed as sale of
one residential lot.
✓ Provided, that beginning January 1, 2021, the vat exemption shall only apply to
sale of real properties not primarily held for sale to customers or held for lease
in the ordinary course of trade or business, sale of real property utilized for
socialized housing as defined under RA No. 7279, sale of house and lot and
other residential dwellings with selling price of not more than two million pesos
(P2,000,000); Provided, further , that every three (3) years thereafter, the
amounts state herein shall be adjusted to its present value using the Consumer
Price Index, as published by the Philippine Statistics Office (PSA).

10. Lease of a residential unit with a monthly rental not exceeding P15, 000 (P12, 800
prior to Jan.1, 2018), regardless of the amount of aggregated rentals received by the
lessor during the year.
 Notes:
✓ LEASE of RESIDENTIAL UNITS where the monthly rental per unit exceeds
P15, 000 (previously P12, 800) but the aggregate of such rentals of the lessor
during the year do not exceed P3, 000,000 (previously P1, 919,500) shall
likewise be exempt from VAT, however, the same shall be subjected to three
(3%) percentage tax (RR 16-2011); RR13-2018).
✓ In case where a lessor has SEVERAL RESIDENTIAL UNITS for LEASE some
are leased out for a monthly rental per unit of not exceeding P15, 000 beginning
Jan. 1, 2018 (previously P12, 800) while others are leased out for more than
P15, 000 or P12, 000, as the case may be, per unit, his tax liability will be.
- The gross receipts from rentals not exceeding P15, 000 (previously P12,
800) per month per unit shall be exempt from VAT regardless of the
aggregate annual gross receipts.
- The gross receipts from rentals exceeding P15, 000 (previously P12, 800)
per month per unit shall be subject to VAT if the annual gross receipts (from
said units only – not including the gross receipts form units leased out for
not more than P15, 000 (previously P12, 800) exceed P3, 000, 000 (P1,
919, 500 prior to 2018). Otherwise, the gross receipts shall be subject to
three percent (3%) percentage tax under section 116 of the tax code (RR
16-2011; RR 13-2018).

11. Sale, importation, printing or publication of books and any newspaper, magazine,
review or bulletin:
a) Appears at regular intervals;
b) With fixed prices for subscription and sale;
c) Not devoted principally to the publication of paid advertisement.

12. Transport of passengers by international carriers doing business in the Philippines.

The same shall not be subject to Other Percentage Taxes as amended under
RA10378 and Transport of cargo by International carriers doing business in the
Philippines, as the same is subject to 3% common carrier’s tax (Other Percentage
Taxes) as amended under RA10378 and (RR 15-2015).

13. “Sale, importation or lease of passenger or cargo vessels and aircraft, including
engine, equipment and spare parts thereof for domestic or international transport
operations, provide, that the exemption from vat on the importation and local purchase
of passenger and/or cargo vessels shall be subject to the requirements on restriction
on vessel importation and mandatory vessel retirement program of MARINA (RR 15-
2015).

14. Importation of fuel, goods and supplies by persons engaged in international shipping
or air transport operations, provided that:
 ▪ Fuel, goods and supplies shall be exclusively or shall pertain to the transport of
goods and/or passenger from a port in the Philippines directly to a foreign port
without stopping at any other port in the Philippines.
▪ Fuel, goods or supplies is used for the purposes other than that mentioned in the
preceding paragraph, such portion of fuel, goods and supplies shall be subject to
12% vat.

15. “Service of banks, non- bank financial intermediaries performing quasi-banking

functions, and other non-bank financial intermediaries such as money changers and
pawnshops, subject to percentage tax under Sections 121 and 122, respectively, of
the Tax Code.

16. Sale or lease of goods and service to senior citizens and persons with disabilities, as
provided under RA No. 9994(Expanded Senior Citizens Act of 2010) and RA No.
10754 ( An Act Expanding the Benefits and Privileges of Persons with Disability
(PWD), respectively.

17. Transfer of property pursuant to Section 40 © (2) of the Tax Code, as amended (Upon
affectivity of RA10963-TRAIN Law only; new provision).

18. Association dues, membership fees, and other assessment and charges collected on
a purely reimbursement basis by homeowner’s associations and condominium
corporations established under RA No. 9904 (Magna Carta for Homeowners’ and
Homeowners Association) and RA No. 4726 ( Condominium Act), respectively. This
provision shall take effect only beginning January 1, 2018 or upon the effectivity of
RA10963-TRAIN Law (new provision).

19. Sale of Gold to the Bangko Sentral ng Piilipinas (BSP). This provision shall take effect
only beginning January 1, 2018 or upon the effectivity of RA10963-TRAIN Law (new
provision).

20. Sale of drugs and medicines prescribed for diabetes, high cholesterol, and
hypertension beginning January 1, 2018 (new provision).

21. ” Sale or lease of goods or properties or the performance of services other than the
transactions mentioned in the preceding paragraphs the gross annual sales and/or
receipts do not exceed the amount of P3, 000, 000 as amended (previously P1, 919,
500).

Persons Allowed of creditable Input Tax

1.) Purchase of local goods or properties upon consummation of the sale
2.) Purchasers of service, lessees or licensees upon payment of compensation, rental or
royalty
3.) Importers of goods upon payment of VAT prior to the release of goods from customs
custody.
Creditable Input Taxes
1.) VAT on local purchase or importation
 2.) Transitional input tax
3.) Presumptive input tax
4.) Standard input tax

Input tax on current transactions

Purchase or importation of goods xxxxxx
Purchase of real
properties xxxxxx
Purchase of services xxxxxx xxxxxx
Input tax on transactions deemed sale xxxxxx
Transitional input tax xxxxxx
Presumptive input tax xxxxxx
Excess input tax carried over from previous period xxxxxx
Input tax on capital goods exceeding P 1,000,000
Deferred from previous period xxxxxx
Total available input taxes xxxxxx
Deduction from input
Less: tax
Input tax on VAT-exempt sales xxxxxx
Input tax claimed as refund or tax
credit
certificate xxxxxx
Input tax on sale to the Government xxxxxx xxxxx

Allowable creditable input tax xxxxx

Transitional Input Tax

• Taxpayers allowed of transitional input tax:
1. Non-VAT taxpayer who becomes liable to VAT since his/her gross sales or receipts
exceeded P3,000,000
2. Non-VAT taxpayer who elects voluntarily to become VAT liable
• For franchise grantee of radio and/or televisions broadcasting, the threshold is P10,
000,000.
• The amount of transitional input tax is 2% base on the value of the beginning inventory
or actual VAT paid, whichever is higher.
• The value of the beginning inventory that is used as the basis for the computation of
the 2% shall be the value allowed for income tax purposes.
Presumptive Input Tax
• Taxpayers allowed of presumptive input tax:
1. Processors of sardines, mackerel, and milk
2. Manufactures of refined sugar and cooking oil
3. Manufactures of packed noodles
• The amount of presumptive input tax is 4% based on the gross value of primary
agricultural products used as input to production.
• Input to production other than primary agricultural product shall not be allowed the 4%
presumptive input tax.
Mantika Corp., a VAT-registered Corp., is a producer of cooking oil from coconut and
corn. It had the following data for the month of January 2018:

Sales, gross of VAT P 784,000

Corn & Coconut, Dec. 31, 2018 50,000
Purchase of Corn & Coconut in 2018 330,000
Corn & Coconut , Jan., 1,2018 20,000
Purchases from VAT suppliers, VAT included:
Packaging Materials 56,000
Supplies 16,800

OUTPUT VAT (P784,000X3/28) P84,000

LESS INPUT VAT
Presumptive P330,000x4% (13,200)
Materials and supplies (7,800)
Vat payable 63,000

Input Tax on Capital Goods

• Capital goods refer to goods or properties with estimated useful life of more than
one year, and which are treated as depreciable assets under the Tax Code, used
directly or indirectly in the production or sale of taxable goods or services.
• If the cost of capital goods, exclusive of VAT, is more than P1, 000,000, input tax
is creditable in the month of purchase.
• If the cost of capital goods, exclusive of VAT, is more than P1, 000,000, input tax
shall be computed as follows:
a) With useful life of less than five years – input tax is apportioned over its
useful life in months
b) With useful life of more than five years – input tax is apportioned over 60
months
• If capital goods with apportioned deprecation or amortization have been sold, the
amortized input tax shall be continued even when the capital gods are no longer with
the taxpayer or the entire unamortized input tax can be claimed as input tax credit
during the month of sale or quarter when the sale or transfer was made.

Standard Input Tax

 • Standard input tax applies only on sale of goods or services to the government or any
of its political subdivisions, instrumentalities, or agencies, including government-
owned or –controlled corporations which shall deduct and withhold a final VAT due at
the rate of 5% of the gross payment.
• The input tax attributable to VAT on sale to government is not creditable against output
tax on sales to non- government entities.
• The 5% final withholding tax VAT shall represent the net VAT payable of the seller.
• The remaining 7% effectively accounts for the standard input VAT for sales of goods
or services to government or any of its political subdivisions, instrumentalities or
agencies including GOCCs, in lieu of the actual input VAT directly attributable or
ratably apportioned to such sales.
• Should actual input VAT attributable to sale to government exceeds 7% of gross
payments, the excess may form part of the seller’s expense or cost. On the other hand,
if actual input VAT attributable to sale to government is less than 7% of gross payment,
the difference must be close to expense or cost.

Leomar , a VAT-registered person has the following data:

Export sales, total invoice amount P3,000,000
Domestic sales, total invoice amount 6,720,000
Purchase used to manufacture Goods for
export and domestic sales:
Raw Materials, VAT inclusive 616,000
Supplies, VAT inclusive 448,000
Equipment, VAT exclusive 300,000

The amount of input tax which can be refunded or converted into tax credit certificates at
the option of leomar is

Raw Materials (616,000x3/28) P66,000

Supplies (P448,000x3/28) 48,000
Equipment (P300, 000X12%) 36,000
Total input vat P150,000
X '3/9
Input vat attributable to export sale P50,000

If the refundable input taxes were not refunded but used as tax credit, the VAT due is:

Output vat P720,000

Total input vat (150,000)
Vat payable P570,000

But assuming further that the taxpayer opted to claim them as refund, the VAT due is:

ANSWER:
Output vat P720,000
Total input vat (100,000)
Vat Payable P620,000

VAT-registered Person with VAT and Non-VAT Transactions

• All the input taxes that can be directly attributed to transactions subject to VAT may
be treated as creditable input tax.
• Input tax that cannot be directly attribute to VAT or VAT- exempt transactions shall be
prorated based on sales volume, and only the ratable portion pertaining to transactions
subject to VAT may be treated as creditable nput tax.
• The ratable portion is computed as follows:

VAT sales x Input tax

Creditable input tax = Total sales

Withholding VAT
1. For purchase of goods or services by the government
• Withholding agent - government or any of its political subdivisions,
instrumentalities or agencies, including GOCC
• 5% of gross payments
2. For payment of services rendered by a non-resident alien in the Philippines
• Withholding agent – government or any of its political subdivisions or individual,
estate, trust, or private corporations
• 12% final tax of gross payments

Apportionment of input tax on mixed transactions

a. Input tax directly attributed to Vatable transactions may be recognized for input
tax credit
b. Input tax directly attributed to VATable transactions may be recognized for
input tax credit
c. Input tax directly attributed to VATable transactions may be recognized for
input tax credit
d. Input tax directly attributed to VATable transactions may be recognized for
input tax credit
e. Input tax directly attributed to VATable transactions may be recognized for
input tax credit
f. Input tax directly attributed to VATable transactions may be recognized for
input tax credit

Excess output or input taxes

a. If at the end of any taxable month or quarter the output tax exceeds the input
tax, the difference is VAT payable (current liability).

a. If the input tax at the end of any taxable quarter (inclusive of input tax carried
over from the previous quarter) exceeds the output tax, the excess input tax
 (current asset) shall be carried over to the succeeding taxable month or
quarter, provided that any input tax attributable to 0-rated sales by a VAT-
registered person may at his option be refunded or applied for a tax
credit certificate.

b. Input taxes on zero-rated sales of goods, properties or services

The input taxes on zero-rated sales of goods, properties or services may at the
option of the VAT-registered person be:
i. Refunded (within 2 years after the close of the quarter when such sales
were made); or
ii. Converted into tax credit certificates which may be used in paying other
NIRC taxes (the two-year peremptory period applies); or
iii. Applied against the output tax of domestic sales.

c. Unused input tax of persons who retired

Unused input taxes of persons whose registration has been cancelled due to
retirement from or cessation of business may be converted into tax credit
certificate which may be used in payment of other NIRC taxes within 2 years
from the date of cancellation or claim for refund if there be no internal revenue
tax liabilities against which the tax credit certificate may be utilized.

d. Period within which to refund

Refund or tax credit certificate shall be granted within 120 days from the date
of submission of complete documents.
If the Commissioner fully or partially denies the application for VAT refund or
issuance of tax credit certification (TCC) on the expiration of 120-day period,
the taxpayer may appeal to the Court of Tax Appeals within 30 days from the
receipt of the denial; otherwise, the decision will become final.

e. Manner of giving refunds

Refunds shall be made upon warrants drawn by the Commissioner of Internal
Revenue or by his authorized representative without the necessity of being
countersigned by the COA Chairman.

VAT On importation of goods

Definition
Importation is the act of bringing goods and merchandise into a country from a foreign
country.
It is deemed complete when the duties upon the merchandise have been paid
and returned to be paid at a port of entry and the legal permit for withdrawal shall have been
granted or in case said merchandise is free of duty, until it has left the jurisdiction of customs
.
Importer refers to any person who brings goods into the Philippines, whether or not
made in the course of trade or business. It includes non-exempt persons or entities who
acquire tax-free imported goods from exempt person, entities or agencies.
Transaction subject
There shall be levied, assessed and collected on every importation of goods a value-
added tax whether the importation is for (1) sale, (2) for use in business, or (3) for personal
use.

Tax rate and tax base

The tax to be imposed shall be 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 postage, commission and similar charges prior to
the release of the goods from customs custody.
The payment of tax shall be made by the importer prior to the release of such goods
from customs custody.
Where the customs duties are determined on the basis of the quantity or volume of
the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any.
Landed cost consist of invoice amount, customs duties, freight insurance and other
charges. If the goods imported are subject to excise tax, the excise tax shall form part of the
tax base.

ILLUSTRATION
Joyce imported goods from Japan. The following are the data relative to such importation:
For Sale Own use
Invoice amount ($1.00=P42) $ 9,500 $3,000
Dutiable value 11,200 5,200
Customs duties P10,500 P3,100
Freight 6,000 2,800
Insurance 8,000 2,500
Other charges 12,500 4,000
Facilitation 10,000 -

Freight from customs house to warehouse, net of VAT 6,000 2,300

After 20 days, the goods intended for sale were sold to Robin for P812, 000.
Compute the VAT payable on the-
1.) Importation if the tariff and customs duties were based on volume or quantity.
2.) Sale if the input tax based on quantity of goods imported.

1.) Invoice amount

For sale ($9,500x42) P399,000
Own use ($3,000x42) P126,000
Customs duties 10,500 3,100
Freight 6,000 2,800
Insurance 8,000 2,500
Other charges 12,500 4,000
Landed cost 436,000 138,400
Rate tax 12% 12%
VAT payable 52,320 16,608

2.) Output tax (812,000x3/28) P87,000

Less: Input taxes
On importation
P52,320
Freight (6,000x12%) 720 53,040
VAT payable 33,960

Invoicing Requirements

A VAT-registered person shall issue:

• For every sale, barter or exchange of goods or properties
- VAT invoices
• For every sale, barter or exchange of services or lease of goods or properties
- VAT official receipts

Information needed in the VAT Invoice or VAT Official Receipt

1. Name and business address of taxpayer who will use the invoice/official receipt;
2. TIN of taxpayer followed by the word “VAT”;
3. The amount of tax shown as a separate item;
4. Date of transaction, quantity, unit cost and description of the goods or properties or the
nature of the service;
5. Authority to Print details and serial number of booklets at the lower left corner of receipt.

• The word “VAT EXEMPT SALE” written or printed prominently if sale is VAT-exempt;

• The words “ZERO-RATED SALE” written or printed prominently if sale is subject to

zero percent

• Option to issue combined or separate invoices/receipts of sale in a combination of

VAT-liable and VAT-exempt sale. If the sale is combined, the invoice or receipt should
indicate the break-down of the sale price between the taxable and the exempt
component and the calculation of the VAT

• For sale to VAT-registered persons amounting to P1,000 or more, indicate the name,
business style (if any), address and TIN of the purchaser

Penalties for Erroneous Issuance of VAT Invoice or VAT Official Receipt

Penalty
 NON-VAT person who issues a VAT • payment of percentage tax, if
invoice/official receipt applicable
• payment of VAT (w/out input tax)
• 50% surcharge on the VAT due
• If the invoice/official receipt
contains the required information,
purchaser shall be allowed to
recognize an input tax credit

VAT-registered person who issues a VAT Subject to 12% VAT

invoice/official receipt for a VAT-exempt
sale without the words “VAT-EXEMPT
SALE”

Self-Help: You can also refer to the sources below to help you further
understand the lesson.

Ballada, W., & Ballada, S. (2018). Transfer and Business Taxation: made easy (17th ed.).
Philippines: DomDane Publishers & Made Easy Books.

Ampongan, O. (2013). Business & Transfer Taxes: 2/e: Conanan Educational Supply.

Tabag, D. ( 2018) Cpa Reviewer in Taxation with Special Notes : Professional Review and
Training Center

Let’s Check
I Questions:
1. What are the three major business internal revenue taxes under the tax code?
________________________________________________________
________________________________________________________
________________________________________________________

2. What is meant by the phrase” in the course of trade or business?

________________________________________________________
________________________________________________________
________________________________________________________

3. What is “gross selling price? And what are the deduction from gross selling price?
________________________________________________________
________________________________________________________
________________________________________________________

4. What are the transactions considered deemed sale?

 5. What Information needed in the VAT Invoice or VAT Official Receipt?

II MULTIPLE CHOICE QUESTIONS

1. Which statement is correct?
a. An invoice which shows the selling price and the value-added tax separately,
but where the value-added tax is wrong, which is paid by the buyer, is a
violation of the revenue regulations on issuance of sales invoices.
b. The invoice which shows the selling price and the value-added tax separately,
and with a total which is a correct amount is a properly prepared invoice.
c. A sales invoice by a VAT taxpayer can be used only on a VAT sale.
d. The sales invoice that shows a total, with an indication that it includes the
value-added tax, even if it does not show the tax separately, is a correctly
prepared invoice

2. Which of the following statements is correct regarding standard input tax?

a. The government or any of its political subdivisions, instrumentalities or
agencies as well as purchasers in the course of trade or business shall deduct
and withhold a final VAT due at the rate of five percent (5%) of the gross
payment
b. Should actual input VAT attributable to sale to government exceeds seven
percent (7%) of gross payments, the excess must be closed to expense or
cost
c. Input tax that can be directly attributable to VAT taxable sales of goods and
services to the Government shall be credited against output taxes arising from
sales to non-Government entities
d. The standard input tax is in lieu of the actual input VAT directly attributable or
ratably apportioned to sales of goods or services to government or any of its
political subdivisions, instrumentalities on agencies including GOCCs

3. Which of the following sales will be exempt from the value added tax?
I- Sale of copra
II- Sale of flowers in their original state
III- Sale of cotton in their original state
a. I only b. III only c. II only d. I, II, III

4. Which of the following milling jobs shall not be exempt from VAT?
a. Palay into rice
b. Corn into grits
c. Wheat into flour
d. Sugar cane into raw sugar
5. First statement: Sales of drugs and medicines of pharmacy run by the hospital to
outpatients are subject to VAT.

Second statement: Pharmacy items used in the performance of medical procedures in

hospital units such as in the operating and delivery rooms and by other departments are
considered part of medical services rendered by the hospital, hence, not subject to VAT.

a. Both statements are correct

b. Both statements are incorrect
c. Only the first statement is correct
d. Only the second statement is correct

6. Who is the statutorily liable for the payment of VAT?

a. Consumer b. Buyer c. Seller d. Buyer or seller

7. Which of the following sale or importation of goods shall not be exempt from VAT?
a. Fertilizers
b. Seeds, seedlings, and fingerlings
c. Fish,prawn,livestock and poultry needs,including ingredients, wether locally
produced or imported, used in the manufacture of feeds
d. Specialty feeds

8. The following shall be considered deemed sale except:

a. A vat registered person withdraws goods from his business for personal use
b. Distribution or transfer to shareholders or investors of property dividends
taken from the
Inventory of the business.
c. Consignment of goods if actual sale is not made within 60 days following the
date such goods were Consigned
d. Retirement or cessation of business of business with respect to all goods on
hand, wether capital goods, stock in-trade, supplies or materials as of the date
of such retirement or cessation whether or not the business is continued by the
new owner or successor

9. The amount of transitional input tax that is allowed as creditable input tax is
a. 4% of beginning inventory or the actual vat paid whichever is higher
b. 4% of beginning inventory or the actual vat paid whichever is lower
c. 2% of beginning inventory or the actual vat paid whichever is lower
d. 2% of beginning inventory or the actual vat paid whichever is higher

10. Gross selling price includes all of the following, except one. Which one?
a. Total amount which the purchaser pays to the seller.
b. Total amount which the purchaser is obligated to pay to the seller.
c. Excise tax.
d. Value-added tax
11. Statement 1: The output value-added tax is computed by multiplying the gross
selling price by 12%; or multiplying the total amount indicated in the invoice by
12/112.
Statement 2: The output value-added tax is computed by multiplying the total
amount indicated in the invoice by 12%.
A. Both statements are correct
B. Both statements are wrong
C. The first statement is correct but the second statement is wrong
D. The first statement is wrong but the second statement is correct

12. S1: in the books of accounts of a VAT-registered taxpayer, sales are recorded net
of output taxes.
S2: in the books of accounts of a VAT-registered taxpayer, purchases are
recorded net of input taxes.
a. Both statements are correct
b. Both statements are wrong
c. The first statement is correct but the second statement is wrong
d. The first statement is wrong but the second statement is correct

13. Which statement is wrong?

a. There is a transitional input tax on sales of goods or properties.
b. There is a transitional input tax on sales of services.
c. There is a presumptive input tax on sales of goods or properties.
d. There is a presumptive input tax on sales of services.

14. Which of the following sale or importation of goods shall not be exempt from
VAT?
a. Fertilizers
b. Seeds, seedlings, and fingerlings
c. Fish,prawn,livestock and poultry needs,including ingredients, wether
locally produced orImported, used in the manufacture of feeds
d. Specialty feeds

15. West Star Realty Corp. Sells a commercial lot in the month of November 2013
under the following terms ( including VAT)
Total contract price P 1,120,000
Downpayment, 11-01-2018 112,000
First installment,12,-01-2018 112,000
Zonal value P 1500,000
The output VAT in November 2018 is:
a. P 12,000 b. P 120,000 c. P 18,000 d. P 180,000
16. Magnifico Corp. Is a Vat registered dealer of appliances. The following data are
for the last quarter of 2016
Sales, total invoice value 6,920,000
Purchases, net of input taxes 5,500,000
Sales return, total invoice value 200,000
Purchase return , net of vat 300,000
Deferred input taxes ( carried over from the third quarter of 2018) 12,000
The value added tax payable for the last quarter of 2018 by Magnifico Corp is
a. P 84,000 c. P 108,000
b. P 96,000 d. P 130,

17. Lavinia had the following data in July:

Sale of goods (excluding VAT) P 2,540,000
Purchases of goods (net of VAT) 1,450,000
Purchases of capital goods (Invoice amount)
Machine 1(Useful life: 6 yrs) 974,400
Machine 2(Useful life: 3 yrs) 67,200
The VAT payable in July is-
a. P 120,860 b. P 19,200 c P 33,600 d. P (40

18. Azucarera de Papa is a processor of refined sugar. It purchases sugarcane from farmers
for processing into intermediate stages until it becomes refined sugar. In a month, it had
the following sales and purchases, no tax included:
Sales P 880 000
Purchases of sugarcane 220 000
Purchases of containers and paper labels 100 000
The value-added tax payable is:
A. P 67 200 C. P 84,800
B. P 89 200 D. P 69 200

19. In a month, total invoice prices/costs:

Domestic sales P 672 000
Export sales 1 500 000
Purchases from VAT-registered persons of:
Goods exported 560 000
Goods sold in the Philippines 224 000
Operating expenses 112 000
The input taxes attributable to export sales which may be refunded or credited against other
internal revenue taxes, including any value-added tax on domestic sales, is:
A. P 60,000 C. P 84 000
B. P 24 000 D. P 96 000

Japayuki Corp. imported an article from Japan. The invoice value of the following
article was P 1 000 000 Yen (1 Yen= P0.50). the following were incurred in connection
with the importation:
Insurance P 15 000
Freight 10 000
Postage 5 000
Wharfage dues 7 000
Arrastre charges 8 000
Brokerage fee 25 000
Facilitation fee 3 000

The imported article was subject to P 50 000 customs duty and P 30 000 excise tax.
Japayuki Corp. spent P 5 000 for trucking from the customs warehouse in Quezon
City.

20. The VAT on importation is:

A. P 65 800 C. P 65 000
B. P 78,000 D. P 50 000

21. Assuming that the imported article was sold for P 950 000, VAT exclusive, the
VAT payable is:
A. P 36,000 C. P 30 000
B. P 29 200 D. P 114 000

Sale of services by a VAT-registered contractor:

Collections on total invoice price for contracts completed
(including P 448 000 for materials) P 1 120 000
Receivables on billings (VAT included) 336 000
Advances on contracts (VAT not included) 200 000
Retentions on contracts made by clients out of contract price already earned 90 000
Purchases of:
Materials (VAT included) 224 000
Services of sub-contractor (VAT not included) 448 000
Services of persons subject to percentage taxes 56 000
Salaries of employees 60 000
22. Output taxes are:
A. P 158 400 C. P 132 000
B. P 144 000 D. P 154 000
23. The input taxes are:
A. P 67 200 C. P 77 760
B. P 72 000 D. P 80 640
24. The value-added tax payable is:
A. P 64 800 C. P 86 400
B. P 86 400 D. P 66 240
25. The following first quarter data pertain to a value-added taxpayer whose purchases were
all from value-added taxpayers:
Output taxes, January P 132 000
Input taxes, January 240 000
 Output taxes, February 348 000
Input taxes, February 144 000
Sales, total invoice price, March 3 360 000
Purchases, total invoice cost, March 1 456 000
The value-added tax payable for March is:
A. P 190 400 C. P 204 000
B. P 192 000 D. P 260 400

Let’s Analyze
Identify the transactions below as transaction subject to VAT at 12%, Zero rated or
VAT exempt.

Transaction 1- An agricultural food processor sells his products in their original state to a
food
processor who also buys packaging materials and containers from a
manufacturer / supplier
Transaction 2- The food processor transform the food products into processed and sells to
Wholesaler/ exporter
Transaction 3- The exporter sells the good to a foreign buyer
Transaction 4 - The wholesaler delivers merchandise to retailers
Transaction 5- The retailers sell the goods to households or ultimate consumers

Transaction 1 _______
Transaction 2 _______
Transaction 3 _______
Transaction 4_______
Transaction 5 ______
In a Nutshell
Leomar a Vat-registered person has the following data:
• Export sale, total invoice amount P 3,000,000
• Domestic sales,total invoice amount P 6,720,000
Purchases used to manufacture goods for export and domestic sales
• Raw Materials, Vat inclusive P 616,000
• Supplies, Vat inclusive 448,000
• Equipment, Vat exclusive 300,000

Answer the following

1. The amount of input tax which can be refunded or converted into tax credit certificates at
the option of Leomar is ____
2. Based on the preceding number, if the refundable input taxes were not refunded but used
as tax credit the vat due is _______
3. But assuming further that the taxpayer opted to claim them as refund the tax due is ____

Big
\ Picture in Focus: ULOa. Apply taxation rules in determining
Other Percentage Tax (OPT)
Week 9 : Unit Learning Outcomes (ULO): At the end of the unit, you are expected to:
a. Identify transactions to subject to Other percentage tax
b. Identify Other percentage tax rates
c. Compute percentage taxes

Topic: Other Percentage Tax (OPT)

Percentage taxes are taxes imposed on the sale, barter or exchange or importation
of goods, or the sale of services bases upon the gross sales, value in receipts derived
by the manufacturer, producer, importer, or seller ( De Leon Comprehensive Review
of Taxation,p.324,1998 Ed)

These are usually measured by a certain percentage of the gross selling price or gross
receipts and are on the sale of goods or services and not on their manufacture,
production or importation.

Other percentage taxes are in addition to income and other taxes paid, unless
specifically excepted. Generally, if the transaction or establishment is subject to other
percentage taxes, then it is exempt from valued added tax, and vice-versa.
It is possible, however, that an individual engaged in business or business is exempt
from both from the payment of value-added tax and from any percentage tax imposed
by the National Internal Revenue Code.

PERCENTAGE TAXES

Section Particulars Tax Base Tax rate

116 Tax on persons exempt from VAT Monthly gross sales 3%
(except or receipts

Beginning January 1, 2019 , annual

gross receipts not exceeding Php
500,000.0 shall be exempt from 3%

Exempt effective January 1, 2019 if

annual gross receipts not exceeding
Php 500,000.00

Purely self-employed and/or

professionals has option to avail an
8% tax on gross sales/receipts and
other non-operating income in
excess of P250,000
 Illustration 1

Gross receipts Registered? ANSWER

Case 1 P 1,200,000 YES 12% VAT
Case 2 2,000,000 YES 12% VAT
Case 3 3,500,000 NO 12%VAT
Case 4 900,000 NO 3% Non-VAT
Case 5 90,000 NO Exempt
Case 6 15,000 YES 12% VAT

Illustration 2
Marino is an owner of a small variety store. His gross sales in any one year do not
exceed P3,000,000. He is not VAT-registered. The following sata are taken from the
books of the variety store for the quarter ending March 31, 2019:

Merchandise inventory, Dec. 31, 2018 P 10 000

Gross sales 45 000
Purchases from VAT-registered supplier 38 500
The percentage tax due is:
45,000 x 3% = 1,350

Section Particulars Tax Base Tax rate

119 Tax on franchises:
1. On gas and water utilities Monthly gross sales 2%
or receipts

2.On radio and/or television Monthly gross

broadcasting companies with annual receipts or pay VAT at 3%
GR of not more than P10,000,000 their option. Once
exercised, it becomes
irrevocable.
Illustration 3
Korakuta Company, a television broadcasting company had the following data in its
books.

Gross receipts during the month P2,000,000

Purchase of materials and services (subject to VAT) 165,000
Purchase of materials and services(not subject to VAT) 130,000

COMPUTE the following:

a. The Other Percentage Tax due if the gross receipts last year amounted to P9,
750,000.
b. The VAT payable if the gross receipts last year amounted to P13, 600,000.
 a.) Gross receipts P2,000,000
Rate of tax 3%
Franchise tax 60,000

b.) Output tax (2,000,000x12%) 240,000

Less: Input tax (165,000x12%) 19,800
VAT payable 220,200

Section Particulars Tax Base Tax rate

Amusement taxes from operators of:
Boxing exhibitions Quarterly gross 10%
Exempt, if a World or Oriental receipts
championship in any division is at
stake, promoted
125 by a Filipino citizen or Corporation, at
least 60% Filipino owned, and one of
the

Professional basketball games Quarterly gross 15%

receipts
Cockpits Quarterly gross 18%
receipts
Cabarets, night or day clubs Quarterly gross 18%
receipts
Jai-alai and race tracks Quarterly gross 30%
receipts

For the purpose of the amusement tax, the term “gross receipts” embraces all the
receipts of the proprietor, lessee or operator of the amusement place. Said gross
receipts also include income from television, radio, and motion picture rights, if any.

Illustration 4

Carrie Rista operates a racetrack. Other than the restaurant that it operates, it also
allows “Burger ka Dyan Burger” a burger stand operated by a concessionaire, to sell
foods inside its premises. The gross receipts during the month are as follows:

From operation of race track P 1,200,000

From restaurant 600,000
 From television coverage 400,000

The gross receipts of “Burger ka Dyan Burger” amount to P450, 000.

Question 1: How much amusement tax is payable by Carrie Rista.

Race track P 1,200,000
Restaurant 600,000
Television coverage 400,000
Gross receipts 2,200,000
Rate of tax 30%
Amusement tax 660,000

When a restaurant is owned or operated by a person other than the proprietor, lessee
or operator of the amusement place, the receipts derived from the operation of the
restaurant is subject to either value-added tax or to 3% “Percentage Tax On Persons
Exempt VAT”.

Section Particulars Tax Base Tax rate

Winner of the prizes in double 4% of the
forecast/quinella & trifecta bets net prize
126 Tax on winnings Person winning not in double 10% of
forecast/quinella & trifecta bets the net
prize

Owners of winning race horses 10% of

the prize

Section Particulars Tax Base Tax rate

123 Tax on life insurance premium, Insurance premiums 5%
except purely cooperative collected
companies or associations

Section Particulars Tax Base Tax rate

⚫ Owners of property who obtain On premiums paid 5%
124 insurance
directly with foreign companies
Insurance premiums 10%
⚫ Agents of foreign insurance collected
companies
 (fire, marine or miscellaneous
insurance agents)

Illustration 5
Nanny Niguro insured his life with Filipino Life Insurance Company. The total amount
of premiums paid to the company during the month was P 20,000. Out of this amount,
P 7,000 was paid in cash and the balance in a promissory note.
How much is the tax on life insurance premiums?

Gross premiums collected P 20,000

Rate of tax 2%
Tax on life insurance premiums 400

127-A Tax on sale, barter or exchange of shares of stock listed and traded through
the local stock exchange (LSE), other than sale by a dealer in securities –
.006 or .60% of gross selling price or gross value in money of the shares of
stock sold, bartered, exchanged or otherwise disposed of.

127-B Tax on shares of stock sold or exchanged through the LSE in an initial public offering
of shares of stock of a closely held corporation in accordance with the proportion of
shares of stock sold, bartered or exchanged or disposed of to the total outstanding
shares of stock after the listing in the LSE:
Up to 25% 4% of GSP
Over 25% to 33 1/3% 2% of GSP
Over 33 1/3% 1% of GSP

Illustration 6
Celeste sold 10,000 shares of stock costing P 95, 000 for P 100, 000. The par value
of the stocks is P 9 per share.

Q. If the shares are listed and traded in the Philippines Stock Exchange, how much
is the Stock Transaction Tax on the sales?

Gross selling price P 100,000

Rate of tax .006
Stock transaction tax 600

Q2. If the shares are not listed and traded in the Philippine Stock Exchange, how
much is the Stock Transaction Tax on the sale?

None. However, the sale is subject to a final withholding tax, computed as follows:
Gross selling price P100,000
Less: Cost 95,000
Net capital gain 5,000
Rate of tax 15%
Final withholding tax (income tax) 750

Illustration 7
Printers Corporation closely held, has an authorized capital stock of 10, 000
shares with par value of P 1.00 per share as of January 1, 2011. Of the 10, 000
authorized shares, 2, 500 thereof is subscribed and fully paid up by the following
stockholders:

Galog 500
Oyang 500
Idong 500
Kulas 500
Manay 500
Total shares outstanding 2500

Printer Corporation finally decides to conduct an initial public offering and

initially offers 2,500 of its unissued shares to the investing public. After the IPO in
March 2009, Printers Corporation’s total issued shares increased from 2,500 to 5,000
shares.
At the IPO, one of the existing stockholders, Manay, has likewise decided to
sell her entire 500 shares to the public.
Q1: If he unissued shares were offered at P10 per share, how much is the tax due on
the primary offering?
Shares offered to the public 2,500
Divide by number of shares outstanding 5,000
Ratio of percentage 50%

Initial offer price (2,500xP10) 25,000

Rate (over 33 1/3%) 1%
Initial Public Offering Tax 250
Q2. If the shares of Manay were offered also at P10 per share, how much is the total
tax due on the Initial Public Offering?
On primary offering P 250
On secondary offering:
Shares offered by Manay to the
public 500
 Divide by number of shares
outstanding 5,000
Ratio of percentage (not over
25%) 10%

Offer price (500xP10) 5,000

Rate (not over
25%) 4% 200
Total tax on initial Public Offering 450
On primary P250
offering
On secondary offering:
Shares offered by Manay to the 500
public
Divide by number of shares 5,000
outstanding
Ratio of percentage (not over 25%) 10%

Offer price (500xP10) 5,000

Rate (not over 4% 200
25%)
Total tax on initial Public Offering 450

Q3. In case Oyang decides to offer his existing 500 shares to the public subsequent
to the IPO at P20 per share, will the sale be subject to IPO tax?

No. In case another stockholder decides to offer his existing shares to the public
subsequent to the IPO, he shall subject to a tax of ½ of 1% of the gross selling price.

Section Particulars Tax Base Tax rate

123 Tax on life insurance premium, Insurance premiums 5%
except purely cooperative collected
companies or associations

Section Particulars Tax Base Tax rate

117 Monthly gross 3%
Percentage tax on domestic receipts
common carriers by land for the
transport of passengers and keepers
of garages, except owners of bancas
and animal-drawn two-wheeled
vehicles.
In computing the percentage tax provided in Section 117 (Common Carrier’s Tax) of
the National Revenue code, the following shall be considered the minimum quarterly
gross receipts in each particular case (RR 9-2007)

Minimum Minimum
Quarterly Monthly

Jeepney for hire-

1.Manila P 65,700 P 21,900
2.Provincial 32,900 10,967
Public utility bus
Not exceeding 30 passengers 98,600 32,867
Exceeding 30 but not exceeding 50 164,200 54,733
Exceeding 50 197,100 65,700
Taxis
1.Manila 98,600 32,867
2.Provincial 65,700 21,900
Car for hire (with chauffeur) 82,100 27,637
Car for hire (w/o chauffeur 49,300 16,434

Illustration 8
Barbosa Lines operates seven (7) buses with a capacity of 40 passengers, playing the
route Naga City to Iriga City, and Iriga to Naga. During the month, it had the following
data:

Gross receipts from passengers P250,000

Gross receipts from carriage of goods, net
of tax 50,000
Purchase of spare parts (inclusive of tax) 38,640
Purchase of supplies from VAT suppliers (invoice
value) 1,400

REQUIRED: Compute the business taxes payable by Barbosa

Lines:

a. From carriage of
passengers
Gross receipts P250,000
Minimum (54,733x7) 383,131
Rate of tax 3%
Common carrier's tax 11,493.93
 b. From carriage of
goods
Output tax
(50,000x12%) 6,000
Less: Input tax
Spare parts
(38,640x3/28) 4,140
Supplies (1,400x3/28) 150
Total 4,290
(50,000/300,000*)x4,290 715
VAT payable 5,285

*Gross receipts from passengers 250,000

Gross receipts from carriage of
goods 50,000
Total gross
receipts 300,000

Section Particulars Tax Base Tax rate

123 OPT on international carriers (air & Monthly gross 3%
shipping) receipts

Illustration 9
Air Philippines Express, a domestic airline company is engaged in domestic and international
transports. During the month, it had the following gross receipts:

Place of Travel Passenger Cargo

From Philippines to other Asian countries P 10,000,000 P1,000,000
From other Asian countries to the Philippines 12,000,000 1,500,000
Domestic operation only 20,000,000 2,000,000

Is the airline company subject to Common Carrier's Tax or to VAT?

It is subject to value-added tax. The output tax is computed as follows:

From domestics operation:

Passenger
(20,000,000x12%) 2,400,000
Cargo (2,000,000x12%) 240,000 2,640,000
 From Philippines to other Asian countries
(10,000,000+1,000,000)x0%
Output tax 2,640,000

Section Particulars Tax Base Tax rate

123 Tax on overseas dispatch, message or Quarterly gross 10%
conversation originating from the receipts from
Philippines such services

Exempted from Sec. 120 are:

• Diplomatic services
• International organizations
• News services
• Government

Section Particulars Tax Base Tax rate

Tax on banks and non-bank financial
intermediaries performing quasi-
banking functions:
Monthly gross
On interests, commissions and receipts
122 discounts from lending activities as
well as income from financial leasing,
based on remaining maturities of the
instruments, as follows:

Maturity period of more than 5 years 1%

Maturity period of 5 years or less 5%

Note: In case of pretermination, the

maturity period shall be reckoned to
end as of the date of pretermination
for purposes of classifying the
transaction and applying the correct
rate of tax.

On royalties, rental of property (real Monthly gross 7%

or personal), profit from exchange receipts
and all other items treated as gross
income under Section 32 of the tax
code.
On trading gains within a taxable Monthly gross 7%
month on foreign currency, debt receipts
 securities, derivations and other
similar financial instruments
On dividends and equity shares in 0%
the net income of subsidiaries

Section Particulars Tax Base Tax rate

Tax on other non-bank financial
intermediaries,including finance
companies, money changers
and pawnshops:
Monthly gross
125 On interests, commissions and receipts
discounts from lending activities as
well as income from financial leasing,
based on remaining maturities of the
instruments, as follows:

Maturity period of more than 5 years 1%

Maturity period of 5 years or less 5%

Note: In case of pretermination, the

maturity period shall be reckoned to
end as of the date of pretermination
for purposes of classifying the
transaction and applying the correct
rate of tax.

On royalties, rental of property (real Monthly gross 7%

or personal), profit from exchange receipts
and all other items treated as gross
income under Section 32 of the tax
code.
On trading gains within a taxable Monthly gross 7%
month on foreign currency, debt receipts
securities, derivations and other
similar financial instruments
On dividends and equity shares in 0%
the net income of subsidiaries

Illustration 10
The Filipino Bank has the following income/loss:
March April
Interest income with maturity of less than 5years P50,000 P100,000
Rentals 50,000 50,000
 Net trading gain (loss) (10,000) 20,000

REQUIRED: Compute the gross receipts tax for the month of March and April.
March:
Interest income with maturity of less than 5 P2,500
years
(P50,000x5%) 3,500
Rentals
(50,000x7%) 6,000
Gross receipts tax, March

April:
Interest income with maturity of less than 5
years
(100,000x5%) 5,000
Rentals
(50,000x7%) 3,500
Net trading gain, April 20,000
Less: Net trading loss,
March (10,000)
Adjusted net trading gain 10,000
X Rate of tax 7% 700
Gross receipts tax, April 9,200

Return and payment of other percentage taxes

a. General rule: Every person liable to pay percentage taxes shall file a monthly return
of the amount of his gross sales, receipts or earnings and pay the tax thereon within
twenty (20) days after the end of each taxable month. The taxpayer may file a
separate return for each branch or place of business, or a consolidated return for
all branches or places of business with the authorized agent bank, Revenue District
Officer, Collection Agent or duly authorized Treasurer of the City or Municipality
where said business or principal place of business is located, as the case maybe.
b. Exceptions:
⚫ The tax on overseas dispatch, message or conversation originating from the
Philippines shall be paid by the person rendering the service within twenty (20)
days after the end of each quarter.
⚫ Amusement taxes shall be paid by the proprietor, lessee, operator or any party
liable within twenty (20) days after the end of each quarter.
⚫ The tax on winnings shall be deducted and withheld by the operator, manager or
person in charge of the horse races and remitted to the Bureau of Internal
Revenue within twenty (20) days from the date the tax was deducted and
withheld.
⚫ The stock transaction tax of 1/2 of 1%, shall be collected by the stock broker and
remitted to the Bureau of Internal Revenue within five (5) banking days from the
date of collection.
 ⚫ The stock transaction tax of 4%, 2% and 1%, in case of primary offering, shall be
paid by the corporation within thirty (30) days from the date of listing of the shares
of stock in the local stock exchange. In case of secondary offering, the tax shall
be collected by the stockbroker and remitted to the Bureau of Internal Revenue
within five (5) banking days from the date of collection.
Any person retiring from a business subject to percentage tax shall notify the nearest
internal revenue officer, file his return and pay the tax due

Self-Help: You can also refer to the sources below to help you further
understand the lesson.

Ballada, W., & Ballada, S. (2018). Transfer and Business Taxation: made easy (17th
ed.). Philippines: DomDane Publishers & Made Easy Books.

Ampongan, O. (2013). Business & Transfer Taxes: 2/e: Conanan Educational Supply.

Tabag, D. ( 2018) Cpa Reviewer in Taxation with Special Notes : Professional Review
and Training Center

Let’s Check
From the list of possible answers below ( Letter A to D) choose the LETTER that best
describes the following statements:
A. SUBJECT TO VAT
B. SUBJECT TO OTHER PERCENTAGE TAXES
C. EXEMPT FROM VAT AND OTHER PERCENTAGE TAXES
D. NOT SUBJECT TO BUSINESS TAX
1. Sales of goods by Ana worth P 450,000,not-VAT registered, not exempt. Its gross
sales is P 650,000.
2. Sales of medicine by hospital pharmacy to in-patients
3. Export sales by persons who are not VAT registered.
4. Gross receipts earned by a cockpit on a “ 2-cock Derby”
5. Interest earned on loans granted by a lending institution.
6. Sales or importation of books.
7. Gross selling price from the sale of share of stocks in the Philippine stock
exchange.
8. Sale of mango fruits by a mango plantation.
9. Gross receipts from carriage of goods and cargo.
10. Export sales by persons who are VAT registered.

II- MULTIPLE CHOICE QUESTIONS

1. Which of the following statements is incorrect?

a. The percentage tax is basically on sale of services
b. The percentage tax may be imposed on sale of goods
c. The percentage tax may be imposed together with the value added tax
d. The percentage tax maybe imposed together with the excise tax
2. The operator of one of the following places is not subject to amusement tax:
A. Cockpits C. bowling alleys
B. Racetracks D. KTV karaoke joints

3. One of the following is subject to 3% percentage tax

a. Establishments whose annual gross sales or receipts exceed P 3,000,000
and who are VAT registered
b. Business whose annual gross sales receipts or sales exceed P 3,000,000
and who are not VAT Registered
c. VAT registered establishment whose annual gross receipts do not exceed P
3,000,000
d. Establishments whose annual gross sales do not exceed P 3,000,000 and
who are not VAT registered.

4. The franchise tax of grantees of radio and/or television broadcasting whose

annual gross receipts of the preceding year do not exceed P 10 000 000 shall be:
b. 2% of the gross receipts C. 10% of the gross receipts
c. 3% of the gross receipts D. 12 % of the gross receipts

4. Banks and non-bank financial intermediaries performing quasi-banking functions

are subject to:
A. Value-added tax C. Franchise tax
B. Gross receipts tax D. Amusement tax

5. Which of the following is subject to 0% gross receipts tax?

a. Gross receipts on interest, commissions and discounts from lending
activities and income from financial leasing.
b. Dividends and equity shares in net income of subsidiaries.
c. Royalties, rentals of property, real or personal, profits from exchange
and all other items treated as gross income in the Tax Code.
d. Net trading gains within the taxable year on foreign currency, debt
securities, derivatives and other similar financial instruments.

6. First statement: The 10% tax on winnings is based on actual amount paid for
every winning ticket after deducting the cost of ticket.
Second statement: The rate of tax on winnings in case of double forecast/
quinella and trifecta bets shall be four (4%) of the actual amount paid for every
winning ticket after deducting the cost of the ticket.
a. Both statements are correct c. only the first statement is correct
b. Both statements are incorrect d. only the second statement is
correct

7. A common carrier by land is engaged in the transport of passengers, goods and

cargoes. He is not VAT-registered. What business taxes is he liable to the
government?
a. 12% VAT
 b. 3% common carrier’s tax
c. 3% tax on VAT-exempt persons on gross receipts from transport of goods
and cargoes and 3% common carrier’s tax on gross receipts from transport
of passengers.
d. 12% VAT on gross receipts from transport of goods and cargoes and 3%
common carrier’s tax on gross receipts

8. An international carrier is subject to the following tax-

a. 12% value-added tax and ordinary income tax on gross receipts within the
Philippines.
b. 0% VAT and 2.5% income tax on gross receipts within the Philippines.
c. 3% other percentage tax on gross receipts
d. 3% other percentage tax on gross receipts and ordinary income tax on gross
income

9. A telephone company, Vat-registered, provides services for domestic and

overseas calls. What business taxes will be due from the services offered?
A. VAT on both services
B. Overseas communications tax on both services
C. VAT on domestic calls and overseas communications tax on overseas
calls.
D. Franchise tax on both services

10. Boxing exhibitions shall be exempt from amusement tax when the following
conditions are present:
1- Involves World, Oriental or Philippine Championships in any division.
2- Both of the contenders are citizens of the Philippines.
3- Promoted by citizens of the Philippines, or association at 60% of the
capital is owned by Filipino citizens.
A. All of the three conditions are correct.
B. None of the three conditions are correct.
C. Only conditions 1 and 2 are correct.
D. Only condition 3 is correct.

11. Gloria invested P 500 000 in the shares of stock of Tabako Corp. the corporation’s
shares are listed and are traded in the local stock exchange. Gloria sold the shares
for P 350 000 through the local stock exchange. The percentage tax on the sale is:
a. P 6 000 b. 2,100 c. 3 000 d. 2 500

12. WateGas Company who operates a gas and radio/television broadcasting

franchise provides the following receipts:
Gas franchise P 2,000,000
Radio franchise 10,000,000
Operating expenses (5,000,000)
Net Income P 7,000,000
The total percentage tax on franchise is:
a. P340,000 c. P210,000
b. P360,000 d. P240,000
13. Banco Deposito had the following data for the first month of the current year:
Interest commissions and discounts from lending activities
(remaining maturity of instrument is 5 years) P
5,000,000
Income from financial leasing
(remaining maturity is more than five years )
3,000,000
Dividends and equity shares in net income of subsidiaries 1,000,000
Rentals of properties 500,000
Net trading gains within the taxable year on foreign currency 300,000

How much is the gross receipts tax?

A. P 386,000 C. P 336,000
B. P 250,000 D. P 326,000
14. Tintin Dera is the owner of a small grocery store with a gross sales in any (one)
year period do not exceed P 3,000,000. She is not a VAT registered taxpayer.
She submits the following data for the month of January 2018.
Merchandise Inventory, December 31, 2017 P 123,450
Gross sales 67,800
Purchases from VAT registered suppliers 156,980
The percentage tax is
a. P 34,823
b. P 6,870
c. P 2,034
d. P 9,876

15. Henares , a Filipino citizen, promoted a word boxing championship in Manila

featuring Ahas a Filipino champion. Gate receipts amounted to P 3,000,000 and
additional receipts from television coverage was P 2,000,000. The amusement
tax is :
b. 0 b. 300,000 c. 200,000 d. 500,000

P 400 000
1. Revenues from the current period
Collections during the period of:
Revenues of prior periods 50 000
Revenues of the current period 300 000
Revenues of the succeeding period 10 000
(advances)
The business tax if a race track:
a. P 64,800 c. P 90 000
b. P 54,000 d. P 108 000

2. A, operates a ferryboat. During a particular quarter, its receipts consist of the

following:
Gross receipts: (without VAT)
Transport of passengers P1,000,000
 Transport of goods 1,500,000
Transport of cargoes 500,000
The common carrier’s tax payable is
a. .P 30,000
b. P 90,000
c. P100,000
d. None
3. Using the data above, the output VAT is
A. P360,000 B. P 90,000 C. P100,000 D. P240,000

In the second quarter of 2019, a taxpayer engaged in the sale of services and whole
annual gross receipts do not exceed P 3,000,000 has the following data:
Accounts receivable, beginning of the quarter P 50 000
Sales during the quarter 100 000
Accounts receivable, end of quarter 75 000
Purchase of supplies, total invoice amount 11 200
4. The percentage tax due for the quarter is:
A. P 2 250 C. P 1 914
B. 3 000 D. 2 664
20. Assuming the taxpayer is VAT-registered, the VAT payable is:
A. P 2 250 C. 7 656
B. 9 000 D. 7 800
Let’s Analyze

1.Dugong Trans, is a common carrier by sea. During a particular quarter its receipts
consist of the following( Figures are net of any business taxes)
Transport of passengers P 3,000,000
Transport of goods 5,500,000
Transport of cargoes 6,500,000
The total business taxes payable is ____________________

2. Dugong Trans, is a common carrier by land. During a particular quarter its

receipts consist of the following( Figures are net of any business taxes)
Transport of passengers P 3,000,000
Transport of goods 5,500,000
Transport of cargoes 6,500,000
The total business taxes payable is ____________________
In a Nutshell
Che-che is a CPA. The following are her data during the period (amounts are net of
tax):
Salary as accounting teacher and reviewer P 20 000
Motel business (amounts are exclusive of tax):
Gross receipts from business (VAT 250 000
registered) 25 000
Discounts
Purchases: 28 000
From VAT-registered suppliers 27 500
From non-VAT suppliers 25 000
 Business expenses (60% VAT)
Practice of profession (not VAT-registered):
Gross receipts 47 500
Purchases
From VAT registered sellers 21 200
From non-VAT sellers 18 000
Expenses- profession 24 000

1. The VAT payable is-

The percentage tax payable is