VAT Discussion

VAT
indirect tax and cumulative

12%
Zero rated
Effectively zero rated
Sec 106-a, Value added tax on sale of goods or properties
Gross selling price- total amount of money or its equivalent which the purchaser pays or obligated to
pay to the seller in consideration of the sale, barter or exchange of the goods or properties, excluding
tax.
Jewelry whether real or imitation- charged with 20%
Excise tax shall be added to the gross of the price.
Sec. 107 Value added tax on importation
Total Value-used by BOC plus custom duties, excise tax, other charges= TOTAL
Sale of Property not Subject to tax but subject to Capital Gains Tax
Sec 108. VAT on Sale of Services and use of Lease of Properties
Ex. Sale or Distribution of electricity, Telecom and telegraph,

The ff sale by VAT registered `persons shall be subject to 0%
Export Sale
a. Sale and actual shipment of goods
b. Ex. Selling it to a nonresident buyer but to a local enterprise, has to be paid in an acceptable
currency.
c. Sale of raw materials or packaging materials to export oriented enterprise whose export sales
exceed 70% of total annual production.
d. Sale of Bangko Sentral
SEZ, a separate form a customs territory.

Section 108, refers to services
Destination principle- tax only to the country where it is to be consumed.
Sec. 106-2,c there is a special law
Sec 108 B3

ABAKADA vs.
RA 9337 the principle of progressive tax system, tax is regressive.
Output Vat (sale)
Input (purchase/importation)
Sec.112, within 2 years after the close of the taxable quarter when the sale are made, apply for the
issuance of tax credit certificate or refund of creditable input tax due or paid attributable to such sales
except transitional input tax.
In zero rating input vat can be claimed.
Vat exempt you cannot claim it!
Exempt transaction Sec. 109 (1) specifically listed
vs. 106-2-c Exempt party, a person granted exemption because of an agreement, effectively zero rated!

Sea gate export sale zero percent vat, local sale is 12%Vat
CIR vs. Benguet : Issue: can be retroactive? No. it cant be applied retroactively especially if it will create
prejudiced on the taxpayer. Taxpayer can recover input vat by passing vat through output vat!
1.Pass it on to the buyer
Zero rated, file a tax refund or tax credit.
Contex Case:
What is transferred is not the liability, it is just the tax burden! Seller is still liabilities. Liability of tax is
different form burden of tax.
Vat exempt if it did not reach 1.5 million
CIR vs. Cebu Toyo Case
Issue? Whether subject to tax credit?
2.incentives
a. Y tax holiday ( EO 226)- exempt from income tax but not VAt
b. tax exempt or 5% spl tax (PD66)-exemption or 5percent exempt from all taxes including vat and u only
pay special preferential tax rate, not liable for IRT and Vat is an internal revenue.
Important because it base in economic zones
Taxable transactions subject to Vat either 12% or 0%
Exemption?
Is cebu toyo taxable transaction or exempt transaction? Taxable transaction, subject to 0%tax
RA 7916
CIR vs. Toshiba Case: Read
Whether or not Toshiba is entitled for tax credit orrefun? Toshiba chose the second option, preferential
tax rate: Court ruled that Commissioner failed
Exempt party
Sec 103 refer

Customs territory-outside ecozones are customs territory, ecozones are foreign territories.
If from Mindanao? Vat registered enterprise selling to foreign zero rated because considered export.
RM circular-tax treatment

Vat registered supplier from customs territory to the ecozones, zero percent.
If non- vat supplier or not registered, then he is exempt.
Only vat registered can claim tax credit.

Cross bordered doctrine?

Export of goods are 0%
Import Vat 12%
CIR vs. American Express- credit card
Whether it is zero rated? Credit card system
Service must be conducted in the country, transaction between phil branch and the Hongkong
1
st
respondent

GR: destination principle- goods and services are only tax in the place where they are consumed. In this
case, no physical existence but rendition is the consumption. Respondent service is subject to zero
percent and exempt from the destination principle: Exemption? Sec.108-a.
Elements of Section 108-B 1-2,
Exemption to the destination principle the following services performed in the pHil by Vat-registered
persons shall be subject to 0%.
Elements? Of Section 108-B
1. The service is performed in the Philippines
2. Service falls under any of the categories provided in section 102(b) of the tAx code
3. It is paid for in the acceptable foreign currency that is accounted for in the accordance with the
regulations of BSP
4. From Burmeise case- recipient must be doing outside the Philippines. The Consurtiom is doing
business because it has a contract with Napocor for 15 years.: Note this is an important
element.

Magsaysay Lines Inc. Vat system-5 ships
March 1, 2014
sec 108-b---this is the destination principle
Manila Mining case- sells gold to BSP, lawyer was able to refute the answer. CA it was aleardy admitted
by the commissioner when it failed to deny. Refunds must be substantiated by re
What is a sales invoice, indicating prices charge, similar invoice that we know, fact of payment or other,
it is important to substantiate claims. Vat claim= Vat rfelcted in the receipts.
Steps for presentation of the claim for refund
Prepare summary
Chronological list of amounts in voices
Certification of the CPA
Those documents must be premarked. Most important step
Original must be submitted for the cancellation after the claim is granted.

Atlas Consolidated Mining Case
Take the cpa for certification, and need not to present the receipts,
HITACHI CASE- failure to state the TIN and imprint the word zero rated.
JRA case-Failure to print words zero-rated sales on receipts fatal to claim for refund of VAT

March 5, 2013

Tax rem-deals with Assessment and collection
Prescriptive period is 3 years- to check whetherwhat was declared is true for assessment
Section 203- April 15-is the due date..whatever is the due date that is the reckoning point.
Only when the assessmentno proceeding in court without assessment for collection of taxes

Sec 222 if there is false or fraudulent return with intent to e vade

How?
10 years-extraordinary assessment

AT and T Case:
2 and 3
TAX Remedies?
Assesment is like a letter. Informing of deficiency of payment, 30days to protest.
Stages
1. Assessment- protest for 30 days
2. Collection- administrative or judicial, admin: in the form of levy, garnishment, distraint
3. Payment
Period of assessment of BIR has 3 years to see if there are deficiencies. Exception. Sec. 222 is
10years.
Requisites of waiver found at the cases

Tulio did not file a protest.

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VAT

indirect tax and cumulative

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