Output Tax

Tax base of VAT on sale of goods

or properties
 Sale of goods
Gross Sales xxx
Less:
Sales Discounts xxx
Sales returns and allow. Xxx xxx
Net Sales xxx
Add: Excise tax, if any xxx
Tax base xxx
 Notes:
 Gross sales include:
› Cash Sales
› Sales on account (open account)
› Installment sales
› Deemed sales (CR WPD)
› Other amounts due from buyer such as packaging, delivery and insurance.
 Sales discount granted and indicated in the invoice at the time of
sale and the grant of which does not depend upon the happening of
future event may be excluded from gross sales within the same
month or quarter it was given.
 Sales returns and allowances may be deducted from the gross sales
for the month or quarter in which a refund is made or a credit
memo is issued.
 Excise tax (a business tax), if any, included in the gross sales,
which VAT is excluded.
 Sale of real properties in the course
of trade or business
 On installment plan (initial payments do not exceed 25%
of the gross selling price). If the VAT base is the gross
selling price, which is higher than the zonal or market
value, the output VAT shall be computed as follows:
Installment received xxx
Add:
Interest xxx xxx
Tax base xxx
VAT rate12%
Output VAT xxx
 On the other hand, if the VAT base is the zonal or market value which is
higher than the gross selling price, the output VAT on every installment
payment shall be:
Actual collection (w/o VAT) x the 12% VAT based on the Gross selling
price higher zonal or
market value

 On cash basis or deferred payment plan (initial payments exceed 25% of

the gross selling price). The VAT base shall be the higher between the
GROSS SELLING PRICE state in the sales document and the ZONAL
OR MARKET VALUE
 Notes:
› If the gross selling price is the zonal or market value of the real property,
the zonal or market value shall be deemed exclusive of the VAT.
› If the VAT is not billed separately, the selling price states in the sales
document shall be deemed inclusive of the VAT.
 Computation of output VAT
Net sales w/o VAT Total invoice w/ VAT
Price xxx Xxx
Multiplied by 12% 12/112
Output VAT xxx xxx
 Sources of output VAT
 Actual Sales of goods or properties
 Deemed sales (CR WPD)
 Zero-rated sales
 Transactions deemed sale (CR
WPD)
A. Consignment of goods if not sold within 60 days following the date of
consignment.
B. Retirement from cessation of business with respect to all goods on hand,
whether capital goods, stock in trade, supplies or materials, as of the
date of such retirement or cessation.
C. 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;
D. Distribution or transfer to creditors in payment of debt; and
E. Distribution or transfer to shareholders or investors as share in the profit.
 Note: In case B, the tax base shall be the lower between acquisition cost
or market value. In all cases, the tax base shall be the actual market
value, if the gross selling price is unreasonably lower (over 30% )than the
actual market value.
 Illustration:
 On January 5, 2018, Smartly Co., VAT registered, sold on
account goods for P 112,000 to Global Corp. The term
was 2/10, n/30. Payment was made on January 10, 2018.
The total amount due is? 109,760
 Gold sells cakes and pastry items to well-known hotels
and restaurants in Metro Manila. The hotels and
restaurants are allowed credit based on their track record.
The total amounts received or receivable from sales by
Golds in January of 2018 were 224,000, including the
value-added tax. 75% of the sales are normally on
account. How much is the value-added tax on the sales
amount for the month of January 2018? 24,000
 Orofar, a trader, made the following sales of
goods during the month of January 2018,
exclusive of VAT:
Cash Sales 200,000
Open account sales 100,000
Installment sales 100,000
Note: Receipt from installment sale is 40,000.
Consignment made (net of VAT):
December 15, 2017 100,000 (Feb
2018)
October 15, 2017 100,000 (Dec
2017)
September 15, 2017 100,000 (Nov
2017)

 Output Tax is? 48,000

 Winery is a manufacturer of wine. During a particular
calendar quarter, it had the following transactions (net
of VAT):
 Jan 4, 2019: Consigned wine to retailer in Makati City
amounting to 200,000.
 Feb 14, 2019: Exported 1,000,000 worth of wine to
Spain.
 Feb 27, 2019: President of Winery celebrated his
birthday, consuming 50,000 worth of wine given to him
by the company as a birthday gift.
 Mar 20, 2019: Declared property dividend of one case
of wine for every 10 shares, amounting to 150,000.
 The output tax for the calendar quarter ended March 31,
2019 is: 48,000
 Villar sells real property in the course of its
business. During the first quarter of 2018, it had
sold a lot under the following terms (including
VAT):
Total contract price 1,120,000
Downpayment 1/10/18 112,000
First installment 3/30/18 112,000
Second installment 1/31/19 56,000

 The output VAT in the first quarter of 2018 is?

24,000
 Export sales
A. The sale and actual shipment of goods from the Philippines to a foreign
country.
B. Sale and delivery of goods to : (1) Registered enterprises within separate
customs territory as provided under special law; and (2) registered
enterprises within tourism enterprises zones as declared by the TIEZA
subject to a provisions of a Tourism Act of 2009.
C. Sale of raw materials or packaging materials to a nonresident buyer for
delivery to a resident local export-oriented enterprise or to export oriented
whose export sales exceed 70% of total annual production.
D. 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.
E. Sale of goods, supplies, equipment and fuel to persons engaged in
international shipping or international air transport operations.
 Note: “Provided that letters C and D above shall be subject to the 12% VAT
(not 0% VAT) upon successful establishment and implementation of an
enhanced VAT refund system that grants of creditable input tax within 90
days from filling of the VAT refund application with the Bureau.
 Effectively zero-rated sales
 Effectively zero-rated sales of goods and properties
shall refer to the local sale(constructively export) by a
VAT-registered person to a person or entity who was
granted indirect tax exemptions under special law or
international agreement, such as
› Sale to Asian Development Bank (ADB);
› Sale to International Rice Research Institute (IRRI);
› Sale to duly registered and accredited enterprises with Subic
Bay Metropolitan Authority (SBMA); and
› Sale of duly registered and accredited enterprises with
Philippine Economic Zone Authority (PEZA).
 Illustration:
 Yakuza, a Japanese residing in the Philippines,
bought garments from Halili Corp., a domestic
corporation, and exported the same to Japan.
Total value of export is 100,000. The output VAT
due on the transaction is? None, 0%