VAT Casasola Notes

VAT
Sec. 105 – Persons liable
Any person' who, in the course of his trade or business, sells, barters,
exchanges, or leases goods or properties, or renders services, and
any person who imports goods, shall be liable to VAT imposed in
Sections 106 to 108 of the Tax Code
EXCEPTION – importation of taxable goods, the importer, whether and

individual or corporation and whether or not made in the course of his trade
or business – liable to VAT imposed in Sec. 107
Mandatory Vat registration
Any person who, in the course of trade or business, sells, barters or

exchanges goods or properties or engages in the sale or exchange of
services is mandatorily required to register if as VAT taxpayer if:
(1) His gross sales or receipts for the PAST 12 months, other than
those that are exempt under Section 109(1)(A) to (V)" of the Tax Code,
have exceeded P1,919,500 effective Jan. 1,2012-," or
(2) There are reasonable grounds to believe that his gross sales
or receipts for the NEXT 12 months, other than those that are exempt
under Section 109(1)(A) to (V)" WILL EXCEED P1,919,500
If he fails to register, he shall he liable to pay the output tax under

Sections 106 and/or 108 of the Tax Code as if he were a VATregistered
person, but without the benefit of input tax credits for the period in
which he was not properly registered.
OPTIONAL VAT registration
1. Any person who is VAT-exempt under Section 109(1 (W)'® not

Election for
VAT required to register for VAT may, in relation to Section109(2), elect
registration
to be VAT-registered.
shall be
irrevocable - Vat exempt ka pero hindi ka required mag register ng VAT, pwede
for the next
ka pa din magapply to be VAT-registered.
3 yrs.
2. Any person who is VAT-registered but enters into transactions which

are exempt from VAT may opt that the VAT apply to his transactions
which would have been exempt under Section 109(1) of the Tax
Code, as amended.
-VAT registered ka pero pumasok ka sa transactions na VAT exempt,
may option ka to apply VAT for these transactions which would have
been exempt
3. Franchise grantees of radio and/or television broadcasting whose

annual gross receipts of the preceding year do not exceed
P10,000,000 derived from the business covered by the law granting
the franchise may opt for VAT registration. This option, once
exercised, shall be irrevocable.
Registration of Non-VAT or VAT exempt taxpayer

The following are required to register as NONVAT persons and pay the
applicable registration fee:
1. VAT exempt persons –Sec. 109; did not opt to register as VAT
taxpayers
2. Gross sales or receipts DO NOT EXCEED 100K during any
12month period.
3. Non stock, non profit and association in trade or business; gross
sales or receipts do not exceed 1,919,500
4. Cooperative OTHER than electric cooperatives
5. Radio and TV broadcasting whose gross annual receipts DO NOT
EXCEED 10K and which do not opt to be VAT REGISTERED.
6. PEZ and other ecozone registered enterprise
7. SBMA and other Freeport zone-registered enterprises
Nature and characteristics of VAT
1. Broad-based tax on consumption of goods, properties or service
in the PH - imposed on each sale, barter, exchange or lease of
goods or properties or on each rendition of services in the course of
trade or business as they pass along the production and distribution
chain and levied on every importation of goods, whether or not in the
course of trade or business.
2. VAT is an indirect tax that may be shifted or passed on by the seller
to the buyer, transferee or lessee of the goods, properties or service.
3. Vat is collected through the tax credit methods
4. Vat is not cascading tax – if at the end of the taxable quarter,
Seller charges:
- output taxes = input taxes; RESULT: no payment is required of
him
- output taxes EXCEED his input taxes or output taxes > input taxes
= pay the excess to the BIR
- Input taxes > output taxes = the excess payment shall be carried
over to the succeeding quarter/s
5. Vat is not a tax on tax – ex vat on toll ways; way operator's gross
receipts and not necessarily on the toll fees. Although the toll way
operator may shift the VAT burden to the toll way user, it will not
make the latter directly liable for the VAT. The shifted VAT burden
simply becomes part of the toll fees that one has to pay in order to
use the toll ways.
6. VAT is a transparent from of sales tax
- Law requires that Vat be shown as a separate item in VAT sales
invoice in case of sale of goods or VAT official receipt –sale of
service
7. VAT adheres to the “Cross Border Doctrine/Destination Principle
- no VAT shall be imposed to form part of the cost of goods destined
for consumption outside of the territorial border of the taxing
authority. Hence, actual export of goods and services from the
Philippines to a foreign country must be free of VAT; while, those
destined for use or consumption within the Philippines shall be
imposed with 12% VAT.
- To applicable for VAT, must be consumed within the PH
- Ex. PEZA registered enterprises are VAT exempt and no VAT can
be passed on to them.
Impact and incidence of VAT
Impact - seller
Incidence – final consumer

Incidental transactions also subject to VAT
Incidental means something else as primary; other than the primary.
Even a non-stock non-profit organization or a government entity

engaged in the sale of goods or services may be subject to VAT.
It is immaterial whether the primary purpose of a corporation indicates that

it receives payments for services rendered to its affiliates on a
reimbursement-on-cost basis only, without realizing profit, for purposes
of determining liability for VAT on services rendered. As long as the entity
provides services for a fee, remuneration or consideration, then the service
rendered is subject t o VAT.
Recreational clubs organized and operated exclusively for pleasure,

recreation and other nonprofit purposes subject to VAT.
Sale of service by a nonresident foreign corporation in the Philippines

to one who is doing business in the Philippines subject to VAT.
Sec. 107 –
VAT on sale of Goods or properties
VAT is imposed and collected on every sale, barter or exchange, or
transactions "deemed sale" of taxable goods or properties at the rate of
12% of the gross selling price or gross value in money of the goods or
properties sold, bartered, or exchanged, or deemed sold IN the Philippines.
Sale of goods or properties which are subject to the 12% VAT:

Requisites:
1. Seller must be VAT-registered, or even if not, a VAT-registrable
person and his gross annual sales exceeds 1,919,500
2. Goods/properties sold may either be tangible or intangible objects
which are capable of pecuniary estimation
3. Sale must be an actual or constructive sale/ a transaction deemed
sale
4. Must be undertaken in the course of trade or business
5. Must have been done in the PH
6. Must be for use or consumption in the PH
7. Must NOT be considered as a zero-rated sale
8. Must not be exempt from VAT under the Tax code, special law, or
intl agreement
It is the real properties "held primarily for sale to customers or held

for lease in the ordinary course of trade or business" that are subject
to the VAT, and not when the real estate transactions are engaged in
by persons who do not sell or lease properties in the ordinary course
of trade or business.
Gross selling price – total amount of money or its equivalent which the
purchaser pays or is obligated to pay to the sale in consideration of the
sale, barter or exchange of the goods or properties, excluding VAT
- Eto ung presyo ng benta mo
- In cases of sale, barter or exchange of real property:
o GSP – the consideration stated in the sales document of
FMV
o If the VAT is not billed separately in the document of sale,
the selling price or the consideration stated therein shall be
deemed to be inclusive of VAT.

VAT Casasola Notes

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VAT

Sec. 105 – Persons liable

EXCEPTION – importation of taxable goods, the importer, whether and

Mandatory Vat registration

Any person who, in the course of trade or business, sells, barters or

If he fails to register, he shall he liable to pay the output tax under

1. Any person who is VAT-exempt under Section 109(1 (W)'® not

2. Any person who is VAT-registered but enters into transactions which

3. Franchise grantees of radio and/or television broadcasting whose

Registration of Non-VAT or VAT exempt taxpayer

Impact and incidence of VAT

Incidence – final consumer

Incidental means something else as primary; other than the primary.

Even a non-stock non-profit organization or a government entity

It is immaterial whether the primary purpose of a corporation indicates that

Recreational clubs organized and operated exclusively for pleasure,

Sale of service by a nonresident foreign corporation in the Philippines

Sale of goods or properties which are subject to the 12% VAT:

It is the real properties "held primarily for sale to customers or held

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