Business Taxes:
1. VAT
2. Percentage Tax
3. Excise Tax
4. Doc Stamp Tax
VAT Application
VAT = Anti-Poor TAX - because it is the buyer that actually burdens/pay VAT (Not the business).
Being an indirect tax, VAT is ultimately passed on to buyers.
VAT Rate is 12% (for VAT taxable goods and services)
VAT on sales = VAT Output
VAT on purchases = VAT Input
VAT Output
-VAT Input
VAT Payable
On VAT Taxable Sales, VAT is normally included on the selling price
Ex. A product is sold with SRP of P120,000
How much is VAT? 120,00 = 112%
VAT Output = 120,000/1.12 X .12
= 12,857.14
Cash ………………………………… P120,000
Sales …………………………………. 107,142.86
VAT Output ……………………… 12,857.14
Said product was purchased at invoice price of P80,000
How much is VAT (VAT Input)
VAT Input = 80,000/1.12 x .12
= 8,571.43
Purchases ……………………….. 71,428.57
VAT Input ……………………… 8,571.43
Cash ……………………………………….. 80,000
The business paid VAT.
VO = 12,857.14
-VI = 8,571.43
VP = 4,285.71
Entry upon payment of VAT:
VAT Output ……………………………… 12,857.14
VAT Input …………………………………… 8,571.43
Cash ………………………………………….. 4,285.71
VAT excluded = VAT (Amount x 12%)
Purchase goods price P100,000 (VAT excluded)
VAT? = (100,000 x 12%) = 12,000
Illustration:
Data from FS is VAT Excluded:
Sales per FS ……………….. P1,000,000, then VAT is P120,000 (1M x .12)
Data from invoice is VAT included:
Sales per Invoice ……… P1,000,000, then VAT is P107,143 (1M/1.12 x .12)
Example 1 - A non-VAT registered person can not charge VAT nor claim VAT Input
Sales (SRP) ………………………………… 120,000
Purchases (VAT included) 110,000
VAT Output = 0
VAT Input = 0
Example 2 - VAT Exempt and VAT at 0%
VAT Exempt VAT at 0%
Sales per Invoice 2,500,000 3,500,000
Purchases per Invoice 1,200,000 2,300,000
VAT Output 0 0
VAT Input 0 246,429
VAT Payable/(Refundable) 0 (246,429)
Example 3 – Non-VAT registered business selling VAT taxable goods exceeding P3M
Sales per FS ………………………………………………….. P3,800,000
Purchases per invoice (VAT Included) …………. 3,100,000
VAT Output………………………………………… P456,000
VAT Input ………………………………………….. 0 (can not claim VAT Input-Non VAT registered)
VAT Payable ……………………………………… P456,000
Example 4 – Sales VAT Exempt and VAT Taxable. Purchases common to both VAT Included
Sales – VAT Exempt ……………………………… P3M per FS
Sales – VAT Taxable ……………………………. 5M per FS
Purchases (common to both activities and VAT included) P4M per Invoice
How much is VAT Payable?
VO ……………………………………………….. 600,000
VI (428,571.43 x 5/8) ………………….. 267,857
VAT Payable ……………………………….. 332,143
Example 5 – VAT is filed and paid monthly and quarterly (Data from FS).
VAT is filed and paid Monthly and Quarterly.
Deadlines
Monthly ……………………. 20 days after end on month
Quarterly ………………….. 25 days after end on the quarter
Jan Feb March Total (1Q)
VAT taxable Sales 1,830,000 970,000 1,235,000 4,035,000
VAT Taxable Purchases 1,200,000 980,000 940,000 3,120,000
VAT Payable/Due 75,600 0 34,200
VO ………. 219,600 116,400 484,200
VI ……… 144,000 117,600 374,400
VP ………. 75,600 ( 1,200) 109,800
VAT paid prev. mos……………………………… 75,600
VAT still due ………………………………………. 34,200
Example 6 – Excess VAT Input carried over. Data from FS
1st QTR April May June 2nd Qtr
Sales …………………………….. 1,000,000 910,000 1,200,000 1,870,000 3.980,000
Purchases ……………………. 1,500,000 950,000 850,000 700,000 2,500,000
VO ……………………………….. 120,000 109,200 144,000 477,600
VI ………………………………… 180,000 114,000 102,000 300,000
VAT Input/(Excess)………… ( 60,000) ( 4,800) 42,000 177,600
(64,800) (60,000)
VAT Due …………………….. 0 0 0 117,600
VAT Paid previous 2 Months.…… 0
VAT Payable- June (2nd Qtr) …… 117,600
Example 7 – Masagana Farm Supplier, Data per FS for the month of January
VAT Output
Sales Poultry Feeds P 1,870,000 ……………. 0
Sales Fertilizer 4,000,000 ……………. 0
Sales Farm chemicals ….. 2,000,000 ……………. 240,000
Sales feeds for Fighting
Cock ……………………… 900,000 ……………. 108,000
Sales Hog Feeds ………….. 1,300,000 …………… 0
Example 8 – Rent of residential units
Rent per unit of not exceeding P15,000 per month is exempt from VAT.
Rent per unit P14,500 annual rent totals P2,600,000 – NV, non-PT
Rent per unit P 15,600 annual rent totals P 2,500,000 – NV, PT
Rent per unit P14,000 annual rent totals P3,500,000 – NV, Non-PT
Rent per unit P16,000 annual rent totals P3,800,000 – V
Example 9 . A business is engaged in VAT and Non-VAT Taxable activities.
The business reported sales (from FS) of Non-VAT taxable goods of P900,000 but erroneously
issued a VAT Receipt and Purchases (for that particular activity) of P700,000 per invoice. How
much is VAT payable?
VAT output ……………………………………. P108,000
VAT input ………………………………………. 0 (the business cannot claim input VAT)
VAT Payable ………………………………….. P108,000
Sale of goods – VAT output based on Gross Selling Price. GSP = SRP (less VAT) paid or payable
Sale of Services – VAT Output is based on Gross Receipts
