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    VAT and LOCAL TAX

    Uploaded by

    Ubalda Abubo
    The document discusses various VAT and local tax transactions and rules. It covers zero-rated sales, input VAT rules and types, VAT payable filing, and exemptions for real property tax, transfer tax, and local business taxes. Key points include that zero-rated sales are not subject to output tax but allow input tax claims, and input VAT includes regular, transitional, presumptive, amortized, and standard types. VAT returns can be filed monthly or quarterly. Real property tax exemptions include government property and certain non-profit entities. Local business taxes are collected by provinces, cities, municipalities, and barangays.

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    © All Rights Reserved
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    VAT and LOCAL TAX

    Uploaded by

    Ubalda Abubo
    29 views4 pages
    The document discusses various VAT and local tax transactions and rules. It covers zero-rated sales, input VAT rules and types, VAT payable filing, and exemptions for real property tax, transfer tax, and local business taxes. Key points include that zero-rated sales are not subject to output tax but allow input tax claims, and input VAT includes regular, transitional, presumptive, amortized, and standard types. VAT returns can be filed monthly or quarterly. Real property tax exemptions include government property and certain non-profit entities. Local business taxes are collected by provinces, cities, municipalities, and barangays.

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    The document discusses various VAT and local tax transactions and rules. It covers zero-rated sales, input VAT rules and types, VAT payable filing, and exemptions for real property tax, transfer tax, and local business taxes. Key points include that zero-rated sales are not subject to output tax but allow input tax claims, and input VAT includes regular, transitional, presumptive, amortized, and standard types. VAT returns can be filed monthly or quarterly. Real property tax exemptions include government property and certain non-profit entities. Local business taxes are collected by provinces, cities, municipalities, and barangays.

    Copyright:

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

    VAT and LOCAL TAX

    Uploaded by

    Ubalda Abubo
    The document discusses various VAT and local tax transactions and rules. It covers zero-rated sales, input VAT rules and types, VAT payable filing, and exemptions for real property tax, transfer tax, and local business taxes. Key points include that zero-rated sales are not subject to output tax but allow input tax claims, and input VAT includes regular, transitional, presumptive, amortized, and standard types. VAT returns can be filed monthly or quarterly. Real property tax exemptions include government property and certain non-profit entities. Local business taxes are collected by provinces, cities, municipalities, and barangays.

    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    of 4

    VAT TRANSACTIONS

    ZERO RATED SALES


    - No output tax charges
    - Can claim input taxes
    o Tax credit certificate
    o Refund
    o Input tax on regular transactions
    - No VAT shall be shifted

    (1) EXPORTING
    a. Direct exporting – PH company sells and delivers good to foreign company (Zero rated)
    b. Indirect Exporting – A company sells good to B company (export-oriented enterprise). B
    sells the goods abroad. A is an indirect exporter. (Vatable)

    - Services other than processing, manufacturing, or repacking of goods


    - Sale to a registered export enterprise (17years)
    - Sale to persons engaged in international shipping/international air transport operations
    - Exempt under special laws/ international treaty
    - Transport of passengers and cargo by air or sea vessel from PH to foreign country
    - Sale to offshore gaming licenses who are subject to 5% gaming tax
    - Sale of power or fuel generated through renewable sources

    INPUT VAT
    Rules in claiming:
    - VAT registered supplier receipt shows VAT paid
    - Incurred in course of business and Vatable sales
    Types:
    (1) Regular input VAT
    ➢ Purchase or importation of goods, real property, or services

    (2) Transitional Input VAT


    ➢ One time input vat
    ➢ 2% value of ENDING INVENTORY or Actual VAT PAID, whichever is higher

    (3) Presumptive Input VAT


    ➢ Provided to a limited number of taxpayers engaged in the manufacture of goods where the
    inputs to the production make use of primary agricultural products
    (a) Processors of sardines, mackerel, and milk
    (b) Manufacturers of refined sugar and cooking oil
    (c) Manufacturers of packed noodles
    ➢ 4% of GROSS VALUE OF PRIMARY AGRICULTURAL PRODUCTS

    (4) Amortized or Deferred Input VAT (until 12/31/21)


    ➢ Allowable for purchase of Capital Goods
    ➢ Less than 1M, outright input vat
    ➢ More than 1M, amortize
    ➢ New law: no more amortization
    (5) Standard Input VAT until (12/31/20)
    INPUT TAX: Sale to government
    - Subject to 12%
    - Govt shall deduct and withhold a final vat due 5% (Effective Jan 1, 2021 – shift from FINAL to
    CREDITABLE Withholding VAT)
    - Old law: FINAL
    Output VAT 120
    Input VAT (7%) (70)
    VAT Due 50
    Less WHT VAT (50)
    VAT Payable 0

    - New Law: CREDITABLE


    Output VAT 120
    Input VAT (Actual) (96)
    VAT Due 24
    Less WHT VAT (50)
    VAT Payable (26)

    VAT Payable: Filing


    VAT RETURNS:
    - Monthly: 2550M 20th day of the following month
    - Quarterly: 2550Q 25th day of the month after the close of the quarter
    VAT CREDIT:
    - Monthly VAT Payments
    - Creditable VAT withheld
    - Advance payment for sugar and flour industries
    - Vat paid in previously filed returns
    - Advance payments

    LOCAL TAXES

    (1) REAL PROPERTY TAX


    Exemptions
    (1) Property of the government
    (2) Religious, charitable, or educational institutions
    (3) Non-profit or religious cemeteries or burial grounds
    (4) Machineries and equipment – local water district/GOCC engaged in supply of water/electricity
    (5) Real property owned by duly registered cooperatives
    (6) Machineries and Equipment – pollution control & environmental protection

    FMV – Assessor’s Market Value – Tax declaration


    Classes of land: (Land, Buildings, and Improvements)
    (1) Residential
    (2) Agricultural
    (3) Commercial
    (4) Industrial
    (5) Mineral
    (6) Special
    (a) Hospital
    (b) Cultural
    (c) Owned and used by local water district and GOCC – water and electric supply

    FORMULA:
    Fair Market Value
    X Assessment Level
    Assessed Value
    X Basic Tax Rate
    Basic Tax
    SEF (1% of AV)
    RPT

    Provinces – 1% of AV
    Cities and Municipality – 2% of AV

    TRANSFER TAX ON TRANSFER OF REAL PROPERTY OWNERSHIP


    ½% in province/municipality
    ¾% in cities

    When to Pay?
    - Annual: on or before January 1
    Advance payment – Discount not exceeding 20%
    - Quarterly Installments: before the last day of each
    quarter

    LOCAL BUSINESS TAXES


    LGU with taxing powers:
    (1) Province
    (2) Municipality
    (3) City
    (4) Barangay

    Fundamental Principles
    (1) Uniform
    (2) EPULA
    (3) Not be left to private person
    (4) For the LGU only
    (5) Progressive system

    Common revenue raising powers of LGUs:


    (1) Service fees and charges
    (2) Public Utility Charges
    (3) Toll fees and charges

    COMMUNITY TAX

    INDIVIDUALS
    - Basic Tax – Php 5
    - Additional Tax – php 1 per 1000 of income
    - Maximum additional tax – Php 5000

    CORPORATION
    - Basic Tax – Php 500
    - Additional Tax – Php 10,000 maximum
    (a) Php 2 per Php5000 Assessed Value of RP
    (b) Php 2 per Php5000 of gross receipts

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