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    Chapter 10

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    looter198
    1. The tax base for real property transactions is generally the gross selling price or actual market value, whichever is higher, less 30%. 2. Certain deemed sale transactions related to business operations, like using inventory for personal use or distributing inventory as profit shares, are subject to output VAT based on the inventory's purchase price. 3. The sale of real property is subject to VAT, except for residential properties below certain price thresholds. VAT is calculated based on the gross selling price or zonal/fair market value of the property, whichever is higher.

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    Chapter 10

    Uploaded by

    looter198
    44 views4 pages
    1. The tax base for real property transactions is generally the gross selling price or actual market value, whichever is higher, less 30%. 2. Certain deemed sale transactions related to business operations, like using inventory for personal use or distributing inventory as profit shares, are subject to output VAT based on the inventory's purchase price. 3. The sale of real property is subject to VAT, except for residential properties below certain price thresholds. VAT is calculated based on the gross selling price or zonal/fair market value of the property, whichever is higher.

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    Chapter 10

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    1. The tax base for real property transactions is generally the gross selling price or actual market value, whichever is higher, less 30%. 2. Certain deemed sale transactions related to business operations, like using inventory for personal use or distributing inventory as profit shares, are subject to output VAT based on the inventory's purchase price. 3. The sale of real property is subject to VAT, except for residential properties below certain price thresholds. VAT is calculated based on the gross selling price or zonal/fair market value of the property, whichever is higher.

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    © All Rights Reserved
    Download as RTF, PDF, TXT or read online from Scribd
    Download as rtf, pdf, or txt
    44 views4 pages

    Chapter 10

    Uploaded by

    looter198
    1. The tax base for real property transactions is generally the gross selling price or actual market value, whichever is higher, less 30%. 2. Certain deemed sale transactions related to business operations, like using inventory for personal use or distributing inventory as profit shares, are subject to output VAT based on the inventory's purchase price. 3. The sale of real property is subject to VAT, except for residential properties below certain price thresholds. VAT is calculated based on the gross selling price or zonal/fair market value of the property, whichever is higher.

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    GROSS SELLING PRICE < ACTUAL MARKET VALUE

    - Commissioner shall determine the appropriate tax base


    - it is considered lower if the difference is lower than 30% of the Actual
    Market Value
    "Deemed Sale" Transactions (taxable base is the MARKET VALUE OF
    SUCH GOODS AS OF THE OCCURENCE OF THE TRANSACTION)
    1. Consumption of Inventory for Personal Use (purchase price of inventory
    used for PERSONAL USE)
    2. Distribution of inventory as profit share (purchase price of the distributed
    inventory is subject to output vat)
    3. Payment of inventory to creditors for debt (amount of debt is the tax
    base subject to output vat)
    4. Consigned Goods not sold within 60 days (cost of goods are subject to
    output vat)
    5. Retirement of business (only INVENTORY LEFT UNSOLD IS DEEMED SOLD
    AND THUS, SUBJECT TO OUTPUT VAT)
    6. Changes or cessation of status of a VAT-Registered person (remaining
    inventory even if not sold, valued at the lower of cost or market value, is
    subject to output vat)
    7. Incorporation of Single Proprietorship (assets, valued at the lower of
    cost/book value or market value, is subject to output vat)
    8. Sale of Scrap or Obsolete Products (sales price of scrap or obsolete product
    is subject to output vat)
    Transactions NOT as "Deemed Sale" Transactions
    1. Merger or Consolidation (transfers are only in form, not in substance, thus
    not subject to output vat; INPUT VAT WILL BE ABSORED BY SURVIVING
    CORPORATION)
    2. Inventory used for Promotion of Business (goods used as samples) (input
    vat may still be claimed)
    3. Inventory used as Office Supplies of the company (input vat may still be
    claimed)

    Capital Assets - not used in business (not subject to VAT; SUBJECT TO


    CAPITAL GAINS TAX OF 6% based on sales price of FMV, whichever is higher)
    Ordinary Assets - used in business and or assets ordinarily sold by the
    business
    -SUBJECT TO VAT EXCEPT:
    1. Residential lot with selling price NOT EXCEEDING
    Php1,919,500
    2. Sale of house and lot and other residential dwellings with
    selling price NOT EXCEEDING Php3,199,500
    3. COMMERCIAL LOT ARE SUBJECT TO VAT REGARDLESS
    OF AMOUNT
    VAT COMPONENTS on Sale of Real Properties
    1. Gross Selling Price (unreasonable if lower than 30% of the actual
    market value)
    - consideration in the sales document or the fair market value,
    WHICHEVER IS HIGHER
    FMV is the higher, at the time of execution of the contract
    of sale or to sell, between:
    1. FMV determined by Commissioner - Zonal Value
    2. FMV as shown in schedule of value of the Provincial City
    Assessors - Real Property Tax Declaration
    2. If VAT is not billed separately in the sales document, the assumption is
    sales price/ contract price / consideration is inclusive of vat
    Installment Sale of Real Property
    1. Initial Payment </= 25%
    - taxable base is equal to: Installment received + Interest + Other
    Charges
    - output and input vat shall be recognized upon or payment of every
    installment payment
    2. Initial Payment > 25%
    - taxable base is the WHOLE SELLING PRICE or ZONAL/FAIR

    MARKET VALUE, whichever is HIGHER


    - if SELLING PRICE (PRICE APPEARING IN THE CONTRACT)
    > ZONAL/FAIR MARKET VALUE
    - VAT = Whole Selling Price (exclusive of vat) x 12%
    - no output vat will be reported for the succeeding years
    EXCEPsT WHEN THERE ARE INTEREST AND SURCHARGES
    - if ZONAL/FAIR MARKET VALUE > SELLING PRICE (PRICE
    APPEARING IN THE CONTRACT)
    - VAT per year = (Actual Collection or amount received for
    the year/Agreed Consideration (amount in contract)) x (Zonal Value / FMV,
    Higher) x 12%
    - upon full collection, if ZONAL/FAIR MARKET VALUE
    increases, additional VAT should be paid
    Additional Output VAT = (Total Vat based on
    INCREASED ZONAL/FAIR MARKET VALUE) s- Previous total VAT
    Payments
    Transmission of Property
    1. If merely held in trust for the trustor or beneficiary, NOT SUBJECT
    TO VAT
    2. If property transferred is on for sale/lease/use in ordinary course and the
    transfer constitute a COMPLETED GIFT, SUBJECT TO VAT
    - COMPLETED GIFT = if transferor is does not have absolute control
    over the property anymore (irrevocable transfers)
    AGRICULTURAL AND MARINE FOOD PRODUCTS
    - IMPORTATION / SALE OF AGRICULTURAL AND MARINE FOOD PRODUCTS in
    their ORIGINAL STATE are BOTH EXEMPT FROM VAT and OPT
    - STILL EXEMPTED EVEN IF THEY HAVE UNDERGONE THE SIMPLE PROCESS
    OF PREPARATION OR PRESERVATION FOR MARKET
    - COPRA is exempt, whether sold by primary producer or owner of land
    where it is produced
    ADVANCED PACKAGING - advanced technological means of package which

    do not essentially alter the original state of the products

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