INPUT TAX Module 150

INPUT TAX
It refers to the VAT due from or paid by a VAT-registered person on importation of
goods or local purchase of goods or services, including lease or use of property, from
another VAT-registered person in the course of his trade or business. It shall also
include the transitional and presumptive input tax determined in accordance with
Section 111 of the NIRC.
 SOURCES OF INPUT TAX CREDITS
1. Domestic purchases (upon consummation) or importation (upon payment) of
goods
a. for sale
b. raw materials in production including packaging
materials
c. supplies in the course of business
d. materials supplied in the sale of service
e. for use in trade or business for which deduction for depreciation
or amortization is allowed (RR 12-2012 – deductibility of
depreciation of vehicles)
2. Purchase of property (real or personal)
3. Purchase of services where VAT has been actually paid
4. Transitional Input Tax / Presumptive Input Tax
5. Transaction Deemed Sale
 SOURCES OF INPUT TAX CREDITS
Claims for Input Tax on Depreciable Goods
Purchases or imports of capital goods*, which are depreciable assets for income tax
purposes, the aggregate acquisition cost of which (exclusive of VAT) in a calendar
month exceeds One Million pesos (P1,000,000.00), regardless of the acquisition cost
of each capital good, shall be spread evenly in the following manner:
a. If the estimated useful life of a capital good is five (5) years or more
 The input tax shall be spread evenly over a period of sixty (60) months and the claim for input tax
credit will commence in the calendar month when the capital good is acquired. The total input taxes on
purchases or importation of this type of capital goods shall be divided by (60) and the quotient will
be the amount to be claimed monthly.

b. If the estimated useful life of a capital good is less than five (5) years
 The input tax shall be spread evenly on a monthly basis by dividing the input tax by the actual number
of months comprising the estimated useful life of the capital good. The claim for input tax credit shall
commence in the calendar month that the capital goods were acquired
 SOURCES OF INPUT TAX CREDITS
Claims for Input Tax on Depreciable Goods
c. The amortization of the input VAT shall only be allowed until December 31,
2021, after which taxpayers with unutilized input VAT on capital goods purchased or
imported shall be allowed to apply the same as scheduled until fully utilized (RMC
No. 21-2022).
 SOURCES OF INPUT TAX CREDITS
RR 12-2012. Input taxes from purchase of depreciable vehicles.
Must be supported with an invoice and other records showing the registrable
identification numbers of the vehicle, the price of the vehicle subject to depreciation,
direct connection of its use to the conduct of trade or business of profession of the
taxpayer.
Only one vehicle for land transport is allowed for the use of an official or employee,
the value not exceeding P2.4 Million.
No input tax to be allowed as deduction from purchase of yachts, helicopters,
airplanes, aircrafts and land vehicles which exceeds P2.4Million, unless the vehicles
purchased are used in transport operations and/or lease of transportation
equipment.
No input taxes will be allowed pertaining to the maintenance expenses of vehicles
not allowed as source of input tax based on the above guidelines.
 SOURCES OF INPUT TAX CREDITS
Substantiation of input tax credits:
1. Domestic Purchase of goods – invoice showing the information in sec. 113
and 237 of the tax code.
2. Importation of goods – import entry and other document showing the
actual payment of VAT on the imported goods.
3. Purchase of services – official receipts showing the information in sec.
113 and 237 of the tax code.
4. Purchase of real property – public instrument plus VAT invoice issued by
the seller.

Issues: 1. Is a CRM/POS tape receipt valid document to support input tax credits? YES
2. Is an incompletely filled up invoice or receipts (e.g. no address of the purchaser) a
ground for disallowance of input tax credit?
yes
 SOURCES OF INPUT TAX CREDITS

In Revenue Regulations No. 10-2015, the BIR prescribed an expanded list of information to
be indicated in the receipts/invoices issued form CRM/POS machines as well as electronic
receipts issued from a network or linked to CAS or components. The required information
include:
a. a space for the name address, TIN and business style of the buyer/customer;
b. information about the BIR-accredited supplier of CRM/POS machine/software and the
BIR Final Permit to Use, at the bottom portion of the receipt; and
c. Senior Citizen/PWD TIN, discount and signature, in case taxpayer is required to provide
discounts to SC/PWD.
 SOURCES OF INPUT TAX CREDITS
In RMC 64-2015, the BIR reiterated and clarified the following existing rules:
1. Only sales made to VAT-registered persons amounting to at least P1,000 are required to have the
name, address, TIN and business style of the buyer/customer indicated in the VAT
receipts/invoices. Hence, receipts/invoices issued from CRM/POS machines issued to non-VAT buyers as
well as on sales of less than P1,000 to VAT-registered buyers are still not required to indicate the
information about the buyer/customer.
2. If the CRM/POS machine is not capable of showing such details about the buyer, a manually pre-
printed receipt/invoice with approved Authority to Print (ATP) must be issued to the buyer/customer
based on the existing regulations of the Bureau.
3. Receipts/Invoices generated from CRM/POS machines/software are mandated to show the said
requisites for the valid claim of input tax credits by the VAT-registered buyer.
 SOURCES OF INPUT TAX CREDITS
[C.T.A. CASE NO. 9506. September 2, 2020.]
PAG-ASA STEEL WORKS, INC., petitioner, vs. BUREAU OF INTERNAL REVENUE,
COMMISSIONER OF INTERNAL REVENUE, ASSISTANT COMMISSIONER
TERESITA M. ANGELES, respondents.

As for the input VAT from purchase of services from Brownstone, we cannot
simply subscribe to petitioner's arguments that it should not be faulted for
Brownstone's errors in issuing the wrong document. Compliance with the
VAT laws and its rules and regulations is not a one-way endeavor. Both
parties in a sales transaction must be diligent enough to ensure that the
document issued evidencing the sale is compliant with the applicable laws
and regulations, especially that non-compliance by one would also have an
adverse effect on the other.
 SOURCES OF INPUT TAX CREDITS
Big Tickets (input taxes) policies and guidelines:

1. RMC 29-09
(Clarifying Certain Issues Relative to the Processing of
Claims for Tax Credit/Refund)
2. RMO 16-07
(Prescribing Additional Procedures in the Audit of Input
Taxes Claimed in the VAT Returns by Revenue Officers…)
3. RMO 22-07
(Prescribing Additional Procedures in the Audit of Input
Taxes Claimed on Importations…)
 SOURCES OF INPUT TAX CREDITS
Transitional Input Tax Credits.
Transitional Input Tax Credits.
• 2% of the value of the inventory or the actual value-added tax
paid on the ff, whichever is higher:

(1) goods purchased for resale in their present condition

(2) materials purchased for further processing, but which have not yet
undergone processing;
(3) goods which have been manufactured by the taxpayer;
(4) goods in process for sale; or
goods and supplies for use in the course of the taxpayer's trade or
business as a VAT-registered person.

 Issue: Should transitional input tax apply only when taxes were previously
paid on the goods of the beginning inventory?
 SOURCES OF INPUT TAX CREDITS
Presumptive Input Tax
4% presumptive input tax (of the gross value in money of
purchases of primary agricultural products used as inputs
to their production) is allowed to persons or firms engaged
in processing/manufacturing of the following products:
1. sardines
2. mackerel
3. milk
4. refined sugar
5. cooking oil
6. packed noodle-based instant meals
 ALLOCATION OF INPUT TAXES BETWEEN VAT TAXABLE AND
VAT NON-TAXABLE OPERATIONS
If a VAT-registered person is also engaged in other activities not subject to VAT, the
input taxes paid for purchases of goods and services which cannot be directly
attributed to either operation shall be allocated between the VAT taxable and VAT
non-taxable operations using the total sales.
REFUND Module 150
 REFUND
Who can claim:
a. Zero-rated sales or lease of goods, properties or services - within 2 years after close of taxable
quarter when the sales were made
b. Cancellation of VAT registration – within 2 years from the date of cancellation

Where to file:
– appropriate BIR office (VCAD/LTS or RDO) having jurisdiction over the principal place of business of the
taxpayer
Period within which refund of taxes/TCC/refund of input taxes shall be made – within 90 days [filed
starting January 1, 2018] from the date of submission of complete documents in support of the
application filed
a. Manner of giving refund – upon warrants drawn by the CIR or duly authorized representative
 REFUND
Place of Filing Application or Claim

Claims for refunds shall be filed with the appropriate BIR Office, Large
Taxpayers Service (LTS), Revenue District Office (RDO) having jurisdiction over
the principal place of business of the taxpayer. Claims for input tax refund
of direct exporters shall be exclusively filed with the VAT Credit Audit
Division (VCAD) with the exception of claims with a mix of VAT zero-rated
sales emanating from sales of power or fuel from renewable energy sources.
 REFUND
Period within which Refund or Tax Credit of Input Taxes shall be
acted upon
In proper cases, the Commissioner shall grant a tax credit/refund for
creditable input taxes within ninety (90) days from the date of submission of
complete documents in support of the application filed.
The 90-day period to process and decide, pending the establishment of the
enhanced VAT Refund System shall only be up to the date of approval of the
Recommendation Report on such application for VAT refund by the
Commissioner or his duly authorized representative; Provided, that all claims
for refund/tax credit certificate filed prior to January 1, 2018 will be governed
by the one hundred twenty (120)-day processing period.
 REFUND
Final Decision
In case of full or partial denial of the claim for tax refund, the
taxpayer affected may, within thirty (30) days from the receipt of the
decision denying the claim, appeal the decision with the Court of Tax
Appeals; Provided, however, that failure on the part of any official,
agent, or employee of the BIR to act on the application within ninety
(90)-day period shall be punishable under Section 269 of the Tax
Code, as amended.
VAT REFUND PROCESS (RMO NO. 47-2020)
Head of processing Concerned office Concerned office
office issues TVN consolidates findings (if recommends issuance of
there is existing eLA) ND/PAN/FAN

RO/GS verifies RDO/LTAD requests for

submitted documents for eLA
claims

RO/GS refers cases

RO/GS communicates resulting in VAT
findings to the TP assessment instead of
refund to RDO/LTAD
VAT REFUND PROCESS (RMO NO. 47-2020)

Direct exporter files claims at

VCAD

TARD reviews docket with ACIR-AS/DCIR-OG/CIR

report approves claim
VAT REFUND PROCESS (RMO NO. 47-2020)

Indirect exporter files claims

at RDO / LTAD

Assessment Division / HREA RD / ACIR – LTS

reviews docket with report approves claim
VAT REFUND TIME FRAME
(RMO NO. 47-2020)
VAT REFUND TIME FRAME
(RMO NO. 47-2020)
VAT REFUND TIME FRAME
(RMO NO. 47-2020)
 MANNER OF GIVING REFUND
Refund shall be made upon warrants drawn by the
Commissioner or by his duly authorized representative without
the necessity of being countersigned by the Chairman,
Commission on Audit (COA), the provision of the Revised
Administrative Code to the contrary notwithstanding. Refunds
under this paragraph shall be subject to post audit by the COA.
COMPLIANCE REQUIREMENT Module 150
PERSONS LIABLE TO VAT
In general – any person who, in the course of trade or business, sells, barters,
exchanges goods or properties or engages in the sale of services subject to VAT
imposed in Secs. 106 and 108 of the Tax Code shall register with the appropriate
RDO using the appropriate BIR forms and pay an annual registration fee in the
amount of P500.00 using BIR Form 0605 for every separate or distinct establishment
or place of business (save a warehouse without sale transactions) before the start of
such business and every year thereafter on or before the 31st of January.
PERSONS LIABLE TO VAT
Mandatory - any person who, in the course of trade or business, sells, barters,
exchanges goods or properties or engages in the sale of services shall be
liable to register if:
 His gross sale or receipts of the past 12 months, other than those that are exempt under Sec.
109 (1)(A) to (U) of the NIRC, have exceeded P3,000,000; or
 There are reasonable grounds to believe that his gross sales or receipts for the next 12
months, other than those that are exempt under Sec. 109 (1)(A) to (U) of the Tax Code, will
exceed P3,000,000
 Any person, whose gross sales or receipts in any twelve (12)-month period shall exceed the
amount of Three Million Pesos (P3,000,000.00) shall register in accordance with Section 236
(A), and shall pay the annual registration fee prescribed within ten (10) days after the end
of the last month of that period. He shall be liable to VAT commencing from the first day of
the month following his registration. However, franchise grantees of radio and television
broadcasting, whose gross annual receipts for the preceding calendar year exceeded Ten
Million Pesos (P10,000,000.00) shall register within thirty (30) days from the end of the
calendar year. [Sec. 6 (b) (3), RR No. 6-97].
OPTIONAL VAT REGISTRATION
A person may opt to register as VAT if he/she/it will fall in any of the
following:
1. Any person who is VAT-exempt under Sec. 4.109-1 (B) (1) (V) may elect to
be VAT registered;
2. Any person who is VAT-registered but enters into transactions which are
exempt from VAT (mixed transactions) may opt that the VAT apply to his
transactions would be exempt under Section 109 (1);
3. Any person who elects to register shall not be entitled to cancel registration
for the next three (3) years; and
4. Franchise grantees of radio and/or television broadcasting with annual
gross receipts not exceeding Ten Million Pesos (P10,000,000.00) (This option
once exercised is irrevocable).
PROCEDURE FOR REGISTRATION
In general, any person who in the course of trade or business, sells, barters,
exchanges goods or properties, or engages in the sale of services subject to
VAT imposed on Secs. 106 and 108 of the Code, as amended, shall register
the VAT tax type with the RDO having jurisdiction over the head office.
Annual Registration:
Five Hundred Pesos (P500.00) payable on or before the 31st day of January
PROCEDURE FOR REGISTRATION
Pursuant to Revenue Memorandum Circular (RMC) No. 5-2023, Transitory
Provisions for the Implementation of the Quarterly Filing of VAT Returns
Starting January 1, 2023 pursuant to Section 114(A) of the NIRC of 1997, as
amended by RA 10963, or the TRAIN Law. In line with Section 37 of RA
10963, amending certain provisions of Section 114 (A) of the Tax Code of
1997, as amended, and as implemented under Section 4-114-1 (A) of RR No.
13-2018, which provides that “beginning January 1, 2023, the filing and
payment required under this Subsection shall be done within twenty-five
(25) days following the close of each taxable quarter.
No longer required to file Monthly VAT return (BIR Form 2550M) -for
transactions starting January 1, 2023
PROCEDURE FOR REGISTRATION
REGISTRATION REQUIREMENTS
FOR SELF-EMPLOYED AND MIXED INCOME INDIVIDUALS
Tax Form
BIR Form 1901- Application for Registration for Self-Employed and Mixed Income Individuals, Non-Resident Alien Engaged in
Trade/Business, Estates/Trusts
Documentary Requirements
› BIR Form No. 1901 version 2018;
› Any identification issued by an authorized government body (e.g. Birth Certificate, passport, driver’s license, Community Tax
Certificate) that shows the name, address and birthdate of the applicant;
› Payment of P500.00 for Registration Fee and P30.00 for loose DST or Proof of Payment of Annual Registration Fee (ARF) (if with
existing TIN or applicable after TIN issuance);
› BIR Printed Receipts/Invoices or Final & clear sample of Principal Receipts/ Invoices;
Other documents for submission only if applicable:
› Special Power of Attorney (SPA) and ID of authorized person, in case of authorized representative who will transact with the Bureau;
› DTI Certificate (if with business name);
› Franchise Documents (e.g. Certificate of Public Convenience) (for Common Carrier);
› Photocopy of the Trust Agreement (for Trusts);
› Photocopy of the Death Certificate of the deceased (for Estate under judicial settlement);
› Certificate of Authority, if Barangay Micro Business Enterprises (BMBE) registered entity;
› Proof of Registration/Permit to Operate BOI/BOI-ARMM, PEZA, BCDA and SBMA
PROCEDURE FOR REGISTRATION
CORPORATIONS
Tax Form
BIR Form 1903 - Application for Registration for Corporations/ Partnerships (Taxable/Non-Taxable)
Documentary Requirements
For Corporations
› BIR Form No. 1903 version 2018;
› Photocopy of SEC Certificate of Incorporation; or
Photocopy Certificate of Recording (in case of partnership); or
Photocopy of License to Do Business in the Philippines (in case of foreign corporation);
› Articles of Incorporation or Articles of Partnerships;
› Payment of P500.00 for Registration Fee and P30.00 for loose DST or Proof of Payment of Annual Registration Fee
(ARF)(not applicable to those exempt from the imposition of ARF);
› BIR Printed Receipts/Invoices or Final & clear sample of Principal Receipts/ Invoices;
Other documents for submission only if applicable:
› Board Resolution indicating the name of the authorized representative or Secretary’s Certificate, in case of
authorized representative who will transact with the Bureau;
› Franchise Documents (e.g. Certificate of Public Convenience) (for Common Carrier);
› Memorandum of Agreement (for JOINT VENTURE)
› Franchise Agreement;
› Certificate of Authority, if Barangay Micro Business Enterprises (BMBE) registered entity;
› Proof of Registration/Permit to Operate with BOI, BOI-ARMM, SBMA, BCDA, PEZA
CANCELLATION OF REGISTRATION
All applicants for cancellation or registration due to closure/cessation or termination of
business shall be subjected to immediate investigation by the Revenue District Officer
concerned to determine the taxpayer’s tax liabilities. [Sec. 9.236-6 of RR 16-2005, as
amended]
Requirements (RMC 57-2020):
BIR Form 1905
List of ending inventory of goods, supplies, including capital goods
Inventory list of unused invoices and receipts (if applicable) Unused invoices and receipts
and all other unutilized accounting forms (for destruction)
Additional documents:
Special Power of Attorney / Board Resolution or Secretary’s Certificate & Government Issued
ID
CANCELLATION OF REGISTRATION
The RDO, upon receipt of the notice, registration update, inventory list of goods, inventory list
of unused sales invoice/official receipts/other accounting forms, and the unused sales
invoices/official receipts and all other unutilized accounting forms shall:
1. “End date” the tax types of the taxpayer;
2. Destruct, in the presence of the taxpayer or his authorized representative, the unutilized
SI/ORs and other accounting forms by cutting them crosswise and lengthwise at the middle
thereof so that the same shall be divided into four ensuring that the same will no longer
be used as originally intended; and
3. Return to taxpayer the destructed SI/ORs and other accounting forms for burning and/or
proper disposition
CANCELLATION OF REGISTRATION
Cancellation of business registration may be granted on the following instances:
1. Closure/cessation of business operations;
2. Dissolution of corporation/partnership;
3. Merger/consolidation;
4. Death of an individual.

The cancellation of registration may either pertain to cancellation of business registration

and/or TIN. Cancellation of business registration shall not automatically cancel the TIN of the
person. TIN is cancelled upon:
1. Death of an individual;
2. Dissolution, merger or consolidation of judicial person;
3. Discovery of a taxpayer having multiple TINS; and
4. Payment of estate tax by the heirs, administrator or executor
INVOICING REQUIREMENT Module 150
INVOICING REQUIREMENT
Invoicing Requirements (information that must be contained in the VAT receipts/invoice):
1. Name, TIN, Business Style and address of seller
2. Date of transaction
3. Name, TIN (if VAT registered and amount exceed P1,000.00), business style, if any, and address of the VAT-
registered purchaser, customer or client
4. Quantity
5. Unit Cost
6. Description of item/nature of service rendered
7. Total Cost
8. VAT amount
9. Authority to Print Receipt Number at the lower left corner of the invoice or receipt
INVOICING REQUIREMENT
A VAT registered person shall issue a VAT receipt or invoice for every sale which shall indicate the
following in addition to the information under Sec 236 of the 1997 NIRC as amended:
1. A statement that the seller is a VAT registered person followed by his TIN;
2. The total amount which the purchaser pays or is obligated to pay to the seller with the
indication that such amount includes the VAT; Provided, that
a. The amount of tax shall be shown as a separate item in the invoice or receipt;
b. If the sale is exempt from VAT, the term “VAT-exempt sale” shall be written or printed
prominently on the invoice or receipt;
c. If the sale is subject to 0% VAT, the term “zero-rated sale” shall be written or printed
prominently on the invoice or receipt; and
d. If the sale involves goods, properties or services some of which are subject to and some of
which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearly indicate the
breakdown of the sale price between its taxable, exempt and zero-rated components, and the
calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt.
3. In case of sales in the amount of One Thousand Pesos (P1,000) or more, indicate the name,
business style (if any), address and TIN of the purchaser.
INVOICING REQUIREMENT
Additional Information to be Indicated in the VAT Invoice/Receipt

"THIS INVOICE/RECEIPT SHALL BE VALID FOR FIVE (5) YEARS FROM THE DATE OF THE ATP.“
And
“Valid until (mm/dd/yyyy)
Note: Required under RMO 12-2013

BIR RR No. 06-2022 (effective July 16, 2022) removes the five (5)-year validity
period on all manual and system-generated receipts and invoices, in line with RA No.
11032.
CONSEQUENCES OF ISSUING ERRONEOUS
VAT INVOICE OR VAT OFFICIAL RECEIPT
A. Issuance of a VAT Invoice or VAT Receipt by a non-VAT person
If a person who is not VAT-registered issues an invoice or receipt showing his TIN,
followed by the word “VAT”, the erroneous issuance shall result to the following:
1. The non-VAT person shall be liable to:
a. The percentage taxes applicable to his transactions;
b. VAT due on the transactions under Sec. 106 or 108 of the NIRC, without the
benefit of any input tax credit; and
c. A fifty percent (50%) surcharge under Sec. 248 (B) of the Tax Code.

2. VAT shall be recognized as an input tax credit to the purchaser under Sec. 110 of
the NIRC, provided the received information are shown on the invoice or receipt.
CONSEQUENCES OF ISSUING ERRONEOUS
VAT INVOICE OR VAT OFFICIAL RECEIPT
B. Issuance of a VAT Invoice or VAT Receipt on an Exempt Transaction by a VAT-Registered
Person
If a VAT-registered person issues a VAT invoice or VAT official receipt for a VAT exempt
transaction, but fails to display prominently on the invoice or receipt the words “VAT-exempt
sale”, the transaction shall become subject to VAT and the issuer shall be liable to pay VAT
thereon. The purchaser shall be entitled to claim an input tax credit on his purchase provided
that the required information are shown on the invoice or receipts.
INVOICE OR INSTRUMENT OF SALE OR
TRANSFER FOR “TRANSACTION DEEMED SALE”
In the case of transfer, use or consumption not in the course of business, a memorandum entry in
the subsidiary sales journal to record withdrawal of goods for personal use is required.
In the case of distribution or transfer to shareholders as share or to creditors in payment of
debt and Consignment of goods, an invoice shall be prepared at the time of the occurrence of
the transaction which should include all the required information.
In the case of retirement from or cessation of business, an inventory list shall be prepared and
submitted to the Revenue District Officer who has jurisdiction over the taxpayer’s principal
place of business not later than thirty (30) days after the retirement or cessation from business.
If the business is to be liquidated and the goods in the inventory are sold or disposed to VAT
registered buyers, an invoice or instrument of sale or transfer shall be prepared, citing the
invoice number wherein the tax was imposed on the deemed sale.
MODIFIED PROCEDURES FOR REGISTRATION OF
PRINTED RECEIPTS OR SALES/COMMERCIAL
INVOICES (RR 26- 2003 AND CLARIFIED BY RMC
26-2004)
1. Printer’s Certificate of Delivery of Receipts and Invoices of the Printer or Printer’s Certificate
of Delivery (PCD) shall be issued by the printer to taxpayer every time a delivery of ordered
receipts/invoices is made.
2. Manually printed Receipts/Invoices shall not be issued/used by the seller to any customer
unless the seller has received his copy of the PCD received by BIR that issued the ATP.
3. The PCD received by BIR shall be issued in 5 copies
4. Unused or un-issued receipts or invoices previously registered and stamped prior to RR No.
26-2003 may still be used until it is fully consumed.
5. Within 30 days from issuance of the PCD, the taxpayer or printer, as the case may be, shall
submit to the concerned BIR office that has jurisdiction over the taxpayer-user’s principal place
of business the triplicate copy of the PCD, together with the certified photocopy of the ATP
and the taxpayer’s Sworn Statement enumerating responsibilities and commitments of the
taxpayer-user.
ATP AND MANNER OF PRINTING
RECEIPTS/INVOICES (RR18-2012)
1. All persons, whether private or government, who are engaged in business shall
secure/apply from the BIR an Authority to Print principal and supplementary
receipts/invoices
2. For newly registered taxpayers, the ATP shall be secured simultaneously with the
Certificate of Registration (COR).
3. The Taxpayer-applicant shall apply for an ATP and submit the required documents,
using the on-line ATP System
4. As a general rule, all applications for ATP of the Head Office (HO) and all its
branches shall be done on-line
5. There shall be one application for ATP per establishment (HO or branch) which
shall be filed with RDO/LT Office concerned where the HO is registered
ATP AND MANNER OF PRINTING
RECEIPTS/INVOICES (RR18-2012)
6. The approved ATP shall be valid only upon full usage of the inclusive serial numbers of
principal and supplementary receipts/invoices reflected in such ATP or five (5) years from
issuance of the same, whichever comes first.
7. No ATP shall be granted for the printing of principal and supplementary receipts/invoices
unless the required information which shall be prescribed in a separate revenue issuance, are
reflected therein
8. The replicate copy of the ATP issued shall be printed at the inside back portion of the
cardboard cover of each booklet/pad of principal and supplementary receipts/invoices
printed.
9. Only BIR Accredited Printers shall have the exclusive authority to print principal and
supplementary receipts/invoices.
10.The on-line ATP System shall generate reports that will be prescribed in the Revenue
Memorandum Order that will be issued for this purpose
ACCOUNTING REQUIREMENTS
(in addition to the regular accounting records maintained):
1. Subsidiary sales journal
2. Subsidiary purchase journal
3. Subsidiary record for acquisition, purchase or importation of depreciable assets
or capital goods
FILING AND PAYMENT OF VAT RETURNS
Every person liable to pay the value added tax imposed under this Title shall
file a quarterly return of the amount of his gross sales or receipts within
twenty-five (25) days following the close of each taxable quarter prescribed
for each taxpayer. The term “taxable quarter” shall mean that quarter that is
synchronized with the income tax quarter of the taxpayer (i.e., the calendar
quarter or fiscal quarter): Provided, however, That VAT-registered persons
shall pay the value-added tax on a monthly basis: Provided, finally That
beginning January 1, 2023, the filing and payment required under the Tax
Code shall be done within twenty-five (25) days following the close of
each taxable quarter.
FILING AND PAYMENT OF VAT RETURNS
FILING AND PAYMENT OF VAT RETURNS
OPTIONAL USE OF BIR FORM NO. 2550M (RMC 52-2023 dated May 10, 2023)
VAT Registered may continue to file and pay the VAT on a monthly basis and
still use BIR Form No. 2550M
 Procedures and guidelines set forth in RR Nos. 16-2005, 6-2014, RMC No. 68-2005 and
other related issuance, regarding the use of BIR Form No. 2550M shall continue to apply
 If the VAT-registered person opts to switch from monthly filing and paying of VAT using BIR
Form No. 2550M to quarterly filing, or vice versa, no penalties shall arise
 No prescribed deadline for the optional monthly filing of VAT using BIR Form No. 2550M
 Filing of BIR Form No. 2550Q and payment of VAT must be made within twenty-five (25)
days following the close of the quarter.
SUBMISSION OF QUARTERLY SUMMARY LIST
OF SALES/PURCHASES/IMPORTATION
RR No. 1-2012 requires the mandatory submission of Quarterly Summary List of
Sales, Purchases and Importation
Taxpayers must submit these to email address: [email protected] using the
electronic format of BIRRELIEF which can be downloaded from the BIR Web.
WITHHOLDING OF CREDITABLE VAT
The government or any of its political subdivisions, instrumentalities or agencies, including
government-owned or controlled corporations (GOCCs) shall, before making payment on
account of its purchase of goods and/or of services taxed at twelve percent (12%) VAT
pursuant to Sections 106 and 108 of the Tax Code, deduct and withhold a creditable VAT due
at the rate of five percent (5%) of the gross payment thereof (net of VAT component)
Beginning January 1, 2021, the VAT withholding system under shall shift from final to a
creditable system pursuant to RMC 36-2021.
Provided, That the payment for lease or use of properties or property rights to nonresident
owners shall be subject to twelve percent (12%) withholding tax at the time of payment:
Provided, however, that payments for purchase of goods and services arising from projects
funded by Official Development Assistance (ODA) as defined under Republic Act No. 8182,
Otherwise known as the "Official Development Assistance Act of 1996," as amended, shall not
be subject to the Final/Creditable Withholding Taxes as imposed in this subsection.
SUSPENSION OF BUSINESS OPERATION
Pursuant to Section 115, the Commissioner is empowered to suspend the business
operations and temporarily close the business establishment of any person for the
following violations:
1. Failure to issue receipts or invoices;
2. Failure to file VAT return;
3. Understatement of taxable sales or receipts by thirty percent (30%) or more of
his correct taxable sales or receipt for the taxable quarter; or
4. Failure of any person to register
COMPUTATIONS OF VAT Module 150
VAT COMPUTATION
VAT PAYABLE
It refers to the excess of output tax over allowable input tax. In the case of importation, it is the VAT
due on such importation

OUTPUT TAX
It refers to the excess of output tax over allowable input tax. In the case of importation, it is the VAT
due on such importation.

INPUT TAX
It refers to the VAT due from or paid by a VAT-registered person on importation of goods or local
purchase of goods or services, including lease or use of property, from another VAT-registered person
in the course of his trade or business. It shall also include the transitional and presumptive input tax
determined in accordance with Section 111 of the NIRC.
COMPUTATION OF OUTPUT
COMPUTATION OF OUTPUT
Sale of Real Property
COMPUTATION OF OUTPUT
Sale of Services/Use or Lease of Properties
COMPUTATION OF OUTPUT
Importation

OUTPUT TAX = Total Landed Cost X 12%

Landed Cost consists of the invoice amount, excise tax (if any), customs duties, freight
and insurance and other charges prior to release of goods from customs custody.
COMPUTATION OF VAT PAYABLE
Output Tax XXX
Less: Input Tax (IT)
IT on Local Purchases XXX
Transitional/Presumptive IT XXX
IT carried over from previous quarter XXX
Importation of Goods XXX XXX
VAT Payable XXX
EFFECT OF EXCESS OUTPUT TAX OR
INPUT TAX
If the output tax exceeds input tax, the excess shall be the VAT payable
If input tax inclusive of input VAT carried over from the previous quarter exceeds the
output tax, the balance may be credited in the following month/quarter
PROBLEM SOLVING (1)
Compute the transitional input tax on each of the following independent cases:
1. MZET Inc. registered as a value-added taxpayers on January 2 of the year.
Inventory as of January 1 had a value for income tax purposes of Two Hundred Fifty
Thousand Pesos (P250,000). The VAT paid on such inventories when purchased was
Thirty Thousand Pesos (P30,000).
2. MZET Inc. registered as a value-added taxpayers on July 1. Inventories as of that
date had a value for income tax purposes of One Hundred Forty-Eight Thousand
Pesos (P148,000). The VAT paid on such inventories when acquired was Two Thousand
Five Hundred Pesos (P2,500.00).
ANSWER (1)
PROBLEM SOLVING (2)
Compute the VAT due during the quarter.
J. Cruz, a taxpayer, is engaged in a restaurant business and a jeepney operator at
the same time. He has complied with the registration requirements of the BIR. For the
quarter Jan – March 2018, gross receipts from restaurant business amounted to Two
Million Eight Hundred Twenty-Two Thousand Pesos (P2,822,000) and Three Hundred
Eighty-Five Thousand Pesos (P385,000) from jeepney operations. During the period,
he paid One Hundred Seventy-Nine Thousand Two Hundred Pesos (P179,200) for the
repair of the building where his office is located.
PROBLEM SOLVING (2)
Supplies purchased for common use amounted to Twenty-Two Thousand Four Hundred
Pesos (P22,400). He also disbursed the following amounts:
ANSWER (2)
ANSWER (2)
PROBLEM SOLVING (3)
ANSWER (3)
PROBLEM SOLVING (4)
ANSWER (4)
PROBLEM SOLVING (5)
ANSWER (5)
AUDIT TECHNIQUE Module 150
PRELIMINARY APPROACH TO
INVESTIGATION
1. Familiarize with the business of the taxpayer. 8. Refer to the report of the audit of the VAT
liabilities of the taxpayer.
2. Ascertain if the taxpayer maintains branches or
other business establishments other than its main 9. Check reasonableness of sales and purchases
office. together with output and input taxes declared.
3. Determine if the taxpayer is engaged in other 10. Tally input tax carried over against prior
lines of business. period’s VAT return.
4. Study the accounting methods and peculiarities in 11. Identify significant changes in sales and
the industry group where the taxpayer belongs. purchases and VAT payment.
5. If possible, conduct interviews with responsible 12. Obtain documentary requirements for claims for
accounting and sales personnel. VAT credit/refund.
6. Examine the quarterly VAT returns and monthly 13. Requests for the books of accounts and
VAT declarations filed. accounting records to be examined.
7. Scrutinize the validation of payment on the VAT
declarations/returns.
AUDIT OF SALES AND OUTPUT TAX
1. Reconcile the amount of each category of sales per monthly VAT declarations,
quarterly VAT returns and financial statements with the recorded amount of sales per
general ledger, sales journal, including the control subsidiary sales journal for each
branch.
2. Review the composition of the sales account in the journals and ledgers
a. Only those transactions which are specifically exempted under Sec. 109 of the
NIRC, are treated as exempt sales.
b. “Deemed” sales of goods and recorded as taxable transactions.
c. Verify and compare entries appearing in the subsidiary and/or sales journal and
compare the same with information shown in the sales invoice.
d. Test the accuracy of the sales summary against the source documents.
e. Determine compliance with invoicing requirements and procedures.
AUDIT OF SALES AND OUTPUT TAX
f. Ensure that the sales invoice issued for sales transactions are all accounted for.
g. For those using loose-leaf invoices/cash register machines, require presentation.
h. Be alert on the use of double or multiple set of invoices bearing identical serial
numbers.
i. Verify if the transactions covered by the “Statement of Account”, “Delivery Receipt”,
Debit Notes and other similar documents are properly recorded as sales.
j. When confronted with a delivery receipt, ascertain whether it covers a
consummated sale or consignment sale.
k. If the taxpayer is engaged in both taxable and exempt transaction, ascertain that
only VAT invoices are issued for VAT taxable transactions and separate invoices are
issued for exempt transactions
l. Test check footings in the sale and subsidiary sales journals and posting to the
general ledger. m. Verify sales contracts, marketing agreements, consignment terms
and other sales related documents.
AUDIT OF SALES AND OUTPUT TAX
n. Scrutinize miscellaneous and other income accounts and ascertain if such accounts
are taxable.
o. Examine the cash receipts book and official receipts issued to uncover any
collection which may not have been included in the taxable sale.
p. Tour the company and plant premises and relate the equipment in use and the
volume of business with the amount of sales declared for tax purposes.
q. Be resourceful in discovering under declaration of sales.
r. If necessary, analyze all accounts affecting total sales particularly cash accounts
and/or notes receivable, collections from receivables, sales discounts and sales
returns, bad debts written off and other relevant accounts.
s. Identify instances of gross selling prices of goods and services being unreasonably
lower than the actual market value and make necessary adjustment.
t. If accounting records are unreliable, look into gate passes, purchase order registers
and other records used by the taxpayer in its day-to-day transactions.
AUDIT OF SALES AND OUTPUT TAX
u. Ascertain the correctness of output tax computations.
v. Verify whether other charges such as excise tax, packaging, insurance, freight and
delivery expenses are treated as part of the gross taxable sale.
w. Account for deductions for sales.
x. In case the taxpayer enjoys full or partial exemption pursuant to special laws,
verify the extent of exemption and compliance with conditions.
AUDIT OF SALES AND OUTPUT TAX
Account for the quantity of goods
actually sold in appropriate case
AUDIT OF SALES AND OUTPUT TAX
AUDIT OF PURCHASE AND INPUT
1. Reconcile the amount of each category of purchases per VAT declarations and returns with
the amount of purchases per subsidiary purchases journal.
2. Analyze and compare the summary of purchases with entries appearing in the subsidiary
purchase journals, purchase invoices and other source documents.
3. Review the composition of the purchase accounts in the journals and ledgers.
4. Determine substantiation of claims for input tax credits.
5. Determine correctness of computation of claims for input tax credits. Check the
authenticity of substantial claims input tax credits by confirming purchase transactions.
6. Ascertain that purchase returns or allowances granted to the taxpayer and input tax
attributable to exempt sales results in a corresponding reduction in the input tax balance.
AUDIT OF PURCHASE AND INPUT
7. Applications for the issuance of tax credit certificates and refund affecting the
input tax credit available at the time of application.
8. Reconcile the amounts of input tax claimed in the VAT return for the portion
carried over from previous quarters and the balance carried to succeeding
quarters with the amounts recorded in the books of accounts.
9. Ascertain that the recorded amount of the purchase of goods or properties and
services are net of VAT.
AUDIT OF ZERO-RATED & FOREIGN
CURRENCY DENOMINATED SALES
1. For actual export sales, review the following:
a. Invoices
b. Bills of lading
c. Inward letters of credit
d. Lending certificates
e. Other commercial documents.
2. Secure approval for zero-rating on export sales other than actual exports.
3. For “foreign currency denomination sales”, review the transactions and ascertain if:
a. the buyer is non-resident;
b. the goods are assembled or manufactured in the Philippines;
c. the goods are to be delivered to a resident in the Philippines; and
d. the goods are paid for and inwardly remitted in acceptable foreign
currency
AUDIT OF ZERO-RATED & FOREIGN
CURRENCY DENOMINATED SALES
4. For zero-rated sales of services, verify contract agreement to ascertain the person
for whom the services were rendered, amount of consideration, description of the
services and documents evidencing actual payments. (See matrix on the next slide)
5. For other effectively zero-rated transactions, secure a copy of the application
approved by the Revenue District Office (now,
REPORTING REQUIREMENT OF REVENUE
OFFICER
1. The audit report should contain the following: 1. Copy 4. Revenue Officer’s Memorandum Report
of the Letter of Authority 5. Revenue Officer’s VAT audit report (BIR Form
2. VAT declarations and VAT returns for the audited 0507)
6. One copy of the Payment Form and Official
period with proper validation of payment by the bank
Receipt
3. Worksheets showing the following schedules:
7. Approved application for zero-rate, if applicable
 Analysis of sales and output tax 8. Photocopies of certificate of registration with
 Analysis of purchases and input tax other government agencies evidencing exemption
 Analysis of relevant accounts such as cash, from VAT, if applicable
receivables, payables, advances, etc. (if necessary) 9. Copy of audited financial statements for the
 Adjustment to sales and output tax period under audit
 Adjustment to purchases and input tax 10.A copy of “Access of Records” letter
11.Other general and specific requirements
 Computation of deficiency VAT
12.Checklist of duly accomplished audit procedures
undertaken