E.

VALUE-
ADDED TAX
TINAYTINAY, CHELLO A.
 A Value-Added Tax (VAT) is a uniform tax
imposed on each sale of goods or services
MEANING OF as they pass along the production and

VALUE-ADDED distribution chain, the tax being limited

only to the value added to such goods or
TAX services by the seller . It is also levied on
every importation.

2
 NATURE OF VAT is a privilege tax. It is imposed not on
the goods or services as such but on the
VALUE-ADDED privilege of selling or importing goods, or

TAX rendering services for consideration. It is a

percentage tax.

3
 Any person who, in the course of trade
or business, sells, barters, exchanges,
PERSON leases goods or properties, renders

LIABLE TO services, and any person who imports

goods shall be liable to the value-added
THE TAX tax (VAT). (Sec.99, NIRC.) Thus, it is
paid by the seller, the person or firm
rendering the service, or the importer.

4
 VAT applies to practically all sales of services and
imports, as well as to the sale, barter, exchange, or
lease of goods or properties (tangible or intangible).
The tax is equivalent to a uniform rate of 12%, based

RATE AND on the gross selling price of goods or properties

sold, or gross receipts from the sale of services.

BASE OF THE On importation of goods, the basis of the tax is the

TAX
value used by the Bureau of Customs (BOC) in
determining tariff and customs duties plus customs
duties, excise taxes, if any, and other charges. Where
the valuation used by the BOC is by volume or
quantity, the VAT basis is the landed cost plus excise
taxes.

5
 Certain transactions are zero-rated or exempt
from VAT. This means that the customer does
not have to pay any VAT as it is charged at a

ZERO-RATED rate of 0%, but because the supply is taxable,

the supplier can reclaim VAT paid on the costs
SALES AND of making that supply.

EXEMPT Certain sales of services exempt from VAT, is a

SALES
sale of goods, properties or service and the use
or lease of properties which is not subject to
output tax and whereby the buyer is not
allowed any tax credit or input tax related to
such exempt sale.

6
 Input Tax means the value-added tax paid
by a VAT-registered person in the course of
his trade or business on importation of
COMPUTATION goods or local purchase of goods or

OF THE TAX. services from a VAT-registered person. It

includes the tax paid on raw materials,
supplies and capital equipment (capital
goods).

7
 Output Tax means the value-added tax due
COMPUTATION on the sale of taxable goods or services by

OF THE TAX. a VAT-registered person or person required

to registered under the law. (Sec. 104)

8
 B y w a y o f i l l u s t r a ti o n ( fi g u r e s
assumed):

Sales P 500,000
Brokerage 300,000
Total P 800,000
Output tax (12%) P 96,000
Importation P 200,000
Local Purchases:
Raw materials P 60,000
Supplies P 40,000
Capital Equipment 150,000
Services 50,000 300,000
Total P 500,000
Less: Input Tax (12%) 60,000
VAT Payable P 36,000

9
 In general – Any person subject to VAT is
required to register with the appropriate
Revenue District Office which has jurisdiction

REGISTRATION over the place where his main or head office is

located.
OF VALUE- Optional registration – A person engaged in

ADDED specified activities exempted from VAT may

TAXPAYERS.
apply for registration. The Commissioner of
Internal Revenue may, for administrative
reasons, deny the application. The registration
may be cancelled upon application of the tax
exempt person.

10
 1. When. – The return of gross sales or receipts shall be
filed and the tax shall be paid within 25 days
following the end of each quarter. Any person whose
registration is cancelled on his application for having

FILLING OF ceased to be liable to VAT, or being an optionally

registered person, shall file a return within 25 days

RETURN AND from the cancellation of such registration.

PAYMENT OF
2. Where. – The quarterly return shall be filed with and
the tax due shall be paid to a duly accredited agent

TAX.
bank located in the revenue district where the taxpayer
is registered. Where there is no such bank, the filing
and payment shall be made with the Revenue District
Officer, Collection Agent, or duly authorized
treasurers of the city or municipality where such
taxpayer has his principal place of business.

11
F. OTHER
PERCENTAGE
TAXES
ARBON, RITCHELYN
 Percentage taxes are taxes measured by a

MEANING OF certain percentage of the gross selling price

or gross value in money of goods sold or
PERCENTAGE imported, or gross receipts or earnings

TAXES. derived by any person engaged in the sale

of services. The value-added tax (VAT) is a
percentage tax.

13
 NATURE OF Percentage taxes are privilege taxes. Like

PERCENTAGE the value-added

imposed on the
tax (VAT),
privilege
they
to
are
sell
TAXES. commodities or services.

14
 They are the following:

1. Those exempt from payment of the value-

added tax (VAT) because their annual gross
PERSONS OR sales or receipt do not exceed P 3,000,000 and

ENTERPRISES
are not VAT-registered.

2. Proprietors or operators or keepers of hotels,

LIABLE TO motels, rest houses, pension houses, lodging

houses, and resorts.
PERCENTAGE 3. Proprietors or operators of restaurants,

TAXES. refreshment parlors, bars, cafes, and other

eating places, including clubs and caterers.

4. Keepers of garages, cars for rent or hire, and

common carriers.

15
 They are the following:

5. Dealers in securities and lending investors.

PERSONS OR 6. Franchise holders or grantees.

7. Persons paying for transmission of overseas

ENTERPRISES dispatches, messages or conversations by

LIABLE TO
telephone, telegraph, telewriter exchange, wireless
and other communication equipment services.

PERCENTAGE 8. Banks and financial intermediaries.

TAXES. 9. Finance companies.

10. Insurance companies and agents of foreign

insurance companies.

16
 PERSONS OR
ENTERPRISES They are the following:

LIABLE TO 11. Proprietors, lessees or operators of

amusement places.
PERCENTAGE 12. Winners in race horses or jai-alai.

TAXES.

17
 FILING OF 1. Persons liable to pay the taxes – They shall file
a quarterly return of the amount of their gross

RETURN AND sales, receipts or earnings and pay the tax due
thereon within 25 days after the end of each

PAYMENT OF taxable quarter.

PERCENTAGE 2. Persons retiring from business – They shall

notify the nearest internal revenue officer, file

TAXES. their returns and pay the tax due thereon within
25 days after closing their business.

18
 FILING OF 3. Exceptions. – the Commissioners of Internal

RETURN AND Revenue may, by regulations, prescribe other

than as stated above, in meritorious cases, the
PAYMENT OF time for filing percentage tax returns for a

PERCENTAGE particular class or classes of taxpayers, and the

manner and time of payment of percentage

TAXES. taxes including a scheme of tax pre-payment.

19
 P R E S E N TAT I O N T I T L E

QUARTERLY
4

PERFOR-
3

MANCE
2

0
Q1 Q2 Q3 Q4

S eri es 1 S eri es 2 S eri es 3

20
“ Business opportunities are like
buses. There's always another

”
one coming.
Richard Branson
THANK YOU
Mirjam Nilsson​
mirjam@contoso.com
www.contoso.com