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    Summary Notes Pecentage Tax On Vat Exempt Sales and Transactions Section 116, NIRC

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    almira garcia
    Section 116 of the Philippine tax code imposes a 3% tax on the gross quarterly sales or receipts of persons whose sales or receipts are exempt from value-added tax (VAT) and who have annual gross sales or receipts not exceeding P3 million. Taxpayers with annual gross sales or receipts exceeding P3 million are instead subject to VAT. The percentage tax is imposed until the taxpayer becomes liable for VAT, at which point VAT applies prospectively. Revenue Regulations 8-2018 provide further guidance on taxation of self-employed individuals and professionals depending on whether their gross sales or receipts are above or below P3 million annually.

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    Summary Notes Pecentage Tax On Vat Exempt Sales and Transactions Section 116, NIRC

    Uploaded by

    almira garcia
    44 views2 pages
    Section 116 of the Philippine tax code imposes a 3% tax on the gross quarterly sales or receipts of persons whose sales or receipts are exempt from value-added tax (VAT) and who have annual gross sales or receipts not exceeding P3 million. Taxpayers with annual gross sales or receipts exceeding P3 million are instead subject to VAT. The percentage tax is imposed until the taxpayer becomes liable for VAT, at which point VAT applies prospectively. Revenue Regulations 8-2018 provide further guidance on taxation of self-employed individuals and professionals depending on whether their gross sales or receipts are above or below P3 million annually.

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    review1_3% Percentage Tax

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    Section 116 of the Philippine tax code imposes a 3% tax on the gross quarterly sales or receipts of persons whose sales or receipts are exempt from value-added tax (VAT) and who have annual gross sales or receipts not exceeding P3 million. Taxpayers with annual gross sales or receipts exceeding P3 million are instead subject to VAT. The percentage tax is imposed until the taxpayer becomes liable for VAT, at which point VAT applies prospectively. Revenue Regulations 8-2018 provide further guidance on taxation of self-employed individuals and professionals depending on whether their gross sales or receipts are above or below P3 million annually.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    44 views2 pages

    Summary Notes Pecentage Tax On Vat Exempt Sales and Transactions Section 116, NIRC

    Uploaded by

    almira garcia
    Section 116 of the Philippine tax code imposes a 3% tax on the gross quarterly sales or receipts of persons whose sales or receipts are exempt from value-added tax (VAT) and who have annual gross sales or receipts not exceeding P3 million. Taxpayers with annual gross sales or receipts exceeding P3 million are instead subject to VAT. The percentage tax is imposed until the taxpayer becomes liable for VAT, at which point VAT applies prospectively. Revenue Regulations 8-2018 provide further guidance on taxation of self-employed individuals and professionals depending on whether their gross sales or receipts are above or below P3 million annually.

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    SUMMARY NOTES

    PECENTAGE TAX ON VAT EXEMPT SALES AND TRANSACTIONS

    Section 116, NIRC

     Any person whose sales or receipts are exempt under section 109 BB, of this code
    from the payment of value-added tax and who s not a VAT-registered person shall
    pay a tax equivalent to three percent of his gross quarterly sales or receipts.
     Requirements
     Annual gross sales or receipts of not more than PM-NVR
     Not vat exempt under sections 109A to 109AA
     Not subject to percentage taxes under sections 117 to 127
     Basic
     Sale of goods = Gross sales
     Sale of service= Gross receipts
     The taxpayer shall be allowed an income tax credit of quarterly payments initially
    made under the 8% income tax option.
     Taxpayer is likewise liable of business tax(es), in addition to income tax. For this
    purpose, the taxpayer is required to update his registration from non-vat to vat
    taxpayer.
     Percentage of tax under Sec.116 shall be imposed from the beginning of the year
    until taxpayer is liable to vat.
     Vat shall be imposed prospectively.
     A percentage tax pursuant to Section 116 of the Tax Code, as amended, shall be
    imposed on the first P3,000,000.00. The excess of the threshold shall be subject to
    VAT.
     Percentage tax due on the P3,000,000.00 shall be collected without penalty, if timely
    paid on the due date immediately following the month the threshold was breached.
     RR 8-2018
     Unless the taxpayer signifies in the 1st Quarter return of the taxable year the
    intention to elect the 8% income tax, the taxpayer shall be considered as having
    the availed of the graduated rates under Section 24(A) of the Tax Code, as
    amended, and such election shall be irrevocable.
     Provided that, at any time during a given taxable year, a tax payer’s gross sales
    or receipts exceeded the VAT Threshold (P3,000,000.00). he/she shall
    automatically be subjected to the graduated rates under section 24(A)(2)(a) of the
    Tax Code.
     Self-employed &/or Professional (SEP)
     Purely SEP; Gross Sales and/or Receipts and other non-operating income; <
    P3M & + NVR
     Applicable Taxes
     Income Tax: Graduated Tax Rate
     Business Tax: OPT under Section 116
     Or if qualified- 8% on gross sales/receipts and other operating income in excess
    of P250,000 IN LIEU of the graduated income tax rate and the Percentage Tax
    under Sec.116
     More Than P3M or VR
     Applicable Taxes
     Income Tax: Graduated Rate
     Business Tax: VAT
     Self-employed - defined as “a Sole Proprietor or an independent contractor who
    reports income from self-employment. S/he control who s/he works for, how the work
    is done and when it is done. It includes professionals whose income is derived purely
    from the practice of profession and not under an employer-employee relationship”.
     Professional (SEP)- defined as a person formally certified by a professional body
    belonging to a specific profession by virtue of having completed a required course of
    studies and/or practice whose competence can usually be measured against an
    established set of standards. It also refers to a person who engages in some art or
    sport for money, as a means of livelihood, rather than as a hobby. It includes but is
    not limited to professional entertainers, professional athletes, directors, producers,
    insurance agents, insurance adjusters, management and technical consultants,
    bookkeeping agents and other recipients of professional, promotional and talent fees.

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