Introduction to VAT in Philippines
VALUE ADDED TAX
What is Value Added Tax (VAT)?
It is a tax on consumption levied on the sale, barter, exchange, or lease of goods or services in the Philippines and on the importation of goods into the Philippines.
It is an indirect tax, as provided in Section 105 of the NIRC. It is an indirect tax meaning the amount of tax may be shifted on the buyer, transferee or lessee of the goods, property, or services. The Code provides that the tax may be shifted to the consumer, most if not at all, taxpayers who are VAT liable shift the burden of paying tax to the consumers.
It is a tax imposed on the gross selling price or gross receipt derived from the sale, barter, or exchange and lease of goods or properties and rendering of services including importation, in the ordinary course of trade or business.
It is the difference between the total sales of the taxpayer for the taxable quarter and his total purchases for the same period subject also to VAT.
Characteristics:
It is a tax on value added of a taxpayer.
It is collected through the tax credit method.
It is a transparent form of sales tax.
It is a broad-based tax on consumption of goods, properties or services in the Philippines.
It is an indirect tax.
The Philippines adopted the “tax inclusive method.”
There is no cascading in the value added tax system.
How are transactions classified under the VAT system of taxation?
Under the VAT system of taxation, transactions are classified as follows:
(a) Taxable transactions (1) Those subject to 12% (2) Those subject to 0%
(b) Exempt transactions
VATable transactions:
A.) Sale, barter or exchange of goods or property.
B.) Transactions deemed sale.
C.) Importation of goods
D.) Sales of services and use or lease of property.
Who are the persons liable and required to pay VAT? (Sec.105)
Any person who, in the course of his trade or business, sells, barters, exchanges, or leases goods or properties, or renders service, and any
What is Value Added Tax (VAT)?
It is a tax on consumption levied on the sale, barter, exchange, or lease of goods or services in the Philippines and on the importation of goods into the Philippines.
It is an indirect tax, as provided in Section 105 of the NIRC. It is an indirect tax meaning the amount of tax may be shifted on the buyer, transferee or lessee of the goods, property, or services. The Code provides that the tax may be shifted to the consumer, most if not at all, taxpayers who are VAT liable shift the burden of paying tax to the consumers.
It is a tax imposed on the gross selling price or gross receipt derived from the sale, barter, or exchange and lease of goods or properties and rendering of services including importation, in the ordinary course of trade or business.
It is the difference between the total sales of the taxpayer for the taxable quarter and his total purchases for the same period subject also to VAT.
Characteristics:
It is a tax on value added of a taxpayer.
It is collected through the tax credit method.
It is a transparent form of sales tax.
It is a broad-based tax on consumption of goods, properties or services in the Philippines.
It is an indirect tax.
The Philippines adopted the “tax inclusive method.”
There is no cascading in the value added tax system.
How are transactions classified under the VAT system of taxation?
Under the VAT system of taxation, transactions are classified as follows:
(a) Taxable transactions (1) Those subject to 12% (2) Those subject to 0%
(b) Exempt transactions
VATable transactions:
A.) Sale, barter or exchange of goods or property.
B.) Transactions deemed sale.
C.) Importation of goods
D.) Sales of services and use or lease of property.
Who are the persons liable and required to pay VAT? (Sec.105)
Any person who, in the course of his trade or business, sells, barters, exchanges, or leases goods or properties, or renders service, and any