Tax 303 - Input Vat
Tax 303 - Input Vat
Tax 303 - Input Vat
d. Exercises: Determine whether or not input tax credit can be availed of (Y/N)
1) Importation of goods for personal use, VAT already paid
2) Importation of goods for business use, VAT not yet paid
3) Purchase on account of domestic goods from VAT-registered supplier evidenced by VAT
invoice
4) Purchase for cash of domestic goods from VAT-registered supplier, evidenced by a receipt
printed by unaccredited printer
5) Purchase of domestic properties from non-VAT seller, evidenced by VAT official receipt
6) Purchase of services from a VAT-registered service-provider, bills already paid
7) Purchase of services from a VAT-registered service provider, bills not yet paid
8) Purchase on account of goods from a non-VAT seller who issued VAT invoice
2) VAT- A VAT-registered person who is also engaged in transactions not subject to VAT shall be
registered allowed to recognize input tax credit on transactions subject to VAT as follows:
person is also a) All the input taxes that can be directly attributed to transactions subject to VAT may
engaged in be recognized for input tax credit; and
transactions
b) If any input tax cannot be directly attributed to either a VAT taxable or VAT-exempt
not subject to
transaction, the input tax shall be pro-rated to the VAT taxable and VAT-exempt
VAT
transactions and only the ratable portion pertaining to transactions subject to VAT
may be recognized for input tax credit computed as follows:
VAT sales / Total sales X Input taxes
3) Exercise: A VAT-registered taxpayer is also engaged in VAT-exempt transactions. The following VAT
exclusive data are made available:
a. Domestic VAT-subject cash sales P1,000,000
b. VAT-exempt sales on account 500,000
c. Export cash sales 300,000
d. Cash purchases of supplies from VAT supplier (used for all transactions) 150,000
e. Purchase on account of merchandise from VAT-registered trader (for VAT sales only) 200,000
REQ: a. Prepare the necessary journal entries assuming the taxpayer will use the input tax on zero-rated
sales as input tax credit
b. Compute the VAT payable assuming the taxpayer will use the input tax on zero-rated sales as input
tax credit
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h) Input tax on a) CIP is considered, for purposes of claiming input tax, as a purchase of
construction in progress service, the value of which shall be determined based on the progress
billings.
b) Until such time the construction has been completed, it will not qualify as
capital goods as defined, in which case, input tax credit on such
transaction can be recognized in the month the payment was made;
Provided, that an official receipt of payment has been issued based on the
progress billings.
i) Contract for the sale of In case of contract for the sale of service where only the labor will be
service where only the supplied by the contractor and materials will be purchased by the contractee
labor will be supplied from other suppliers, input tax credit on the labor contracted shall still be
recognized on the month the payment was made based on the progress
billings while input tax on the purchase of materials shall be recognized at
the time the materials were purchased.
j) Input tax claimed while Once the input tax has already been claimed while the construction is in
the construction is in progress, no additional input tax can be claimed upon completion of the
progress asset when it has been reclassified as a depreciable capital asset and
depreciated.
k) Rules on allowing input a. Only one vehicle for land transport is allowed for the use of an official or
tax credit on vehicles, employee, the value of which should not exceed P2,400,000.
and other expenses b. No depreciation shall be allowed for yachts, helicopters, airplanes and/or
incurred (RR No. 12- aircrafts, and land vehicles the value of which exceed the P2,400,000
2012, Oct. 12, 2012) threshold amount, unless the taxpayer’s main line of business is transport
operations or lease of transportation equipment and the vehicles
purchased are used in said operations;
c. All maintenance expenses on account of non-depreciable vehicles for
taxation purposes are disallowed in its entirety;
d. The input taxes on the purchase of non-depreciable vehicles and all input
taxes on maintenance expenses incurred thereon are likewise disallowed
for taxation purposes.
l) Exercises:
1) Lalisa Corp. acquires 3 units of office equipment at P600,000 each on February 2018. The estimated life is
4 years.
Question
1 – Can the taxpayer amortize the input tax?
2 – If it can amortize the input tax, how much is the monthly amortization?
3 – Up to what month will the amortization be?
4 – Assuming the taxpayer acquires the office equipment on February 2022, can it amortize the input tax on
the acquisition?
2) Sassa Girl imports motor vehicle for land transport on December 2021. Its total landed cost is P2,400,000.
The estimated life of the vehicle is 6 years?
Question
1 – Can the taxpayer amortize the input tax?
2 – If he can amortize the input tax, how much is the monthly amortization?
3 – Up to what month will the amortization be?
4 – Assuming, he imports the vehicle on December 2022, can he amortize the input tax on the importation?
3) A taxpayer acquires an office furniture on January 2018 for P1,000,000. Its estimated life is 3 years.
Question
1 – Can the taxpayer amortize the input tax?
2 – If he can amortize the input tax, how much is the monthly amortization?
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3) Exercises: Determine whether or not the following can avail of the presumptive input tax (Y/N)
a) Processor of sardines on its purchase of tomatoes, onions and other agricultural products used as
inputs in the production
b) Processor of sardines on its purchase of fresh fish to be used in the production of processed
sardines
c) Processor of fruits on its purchase of fresh fruits to be used in processing canned fruits
d) Manufacturer of refined sugar on its purchase of packaging materials and labels
e) Manufacturer of cooking oil on its purchase of copra
f) Manufacturer of instant champorado on its purchase of glutinous rice to be used in manufacturing
instant champorado
The value allowed for income tax purposes on inventories shall be the basis
for the computation of the 2% (used to be 8%) transitional input tax,
including goods that are exempt from VAT under Sec. 109 of the Tax Code.
A taxpayer is engaged in VAT-subject transactions but enjoys exemption from VAT as an entitty because his
annual gross sales do not exceed the VAT threshold amount. Beginning the current year, he decides to
optionally register under the VAT system. Compute the transitional input tax based on the following data:
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5) Exercise: A VAT-registered service provider has the following transactions for the first quarter of 2018:
1) Purchased materials on account for use in a contract with the Government paying P896,000, gross of VAT.
2) Sent a bill to client with VAT inclusive amount of P5,600,000.
3) Collected P2,000,000 out of the P5,000,000 contract price, net of 5% withholding VAT and 2%
withholding income tax.
Prepare the necessary journal entries on the books of the service provider.
a. Withholding VAT
Transactions Withholding Agent Withholdng VAT
Rate
1) Purchase of goods by Government or any of its political subdivisions, 5% (used to be
Government, political instrumentalities or agencies, including government- 3%) of gross
subdivisions, etc. owned or controlled corporations (GOCCs) payment made
(final)
2) Purchase of services by Government or any of its political subdivisions, 5% (used to be
Government, political instrumentalities or agencies, including government- 6%) of gross
subdivisions, etc. owned or controlled corporations (GOCCs) payments (final)
3) Payments for lease or Government or any of its political subdivisions, 12%
use of properties or instrumentalies or agencies, including GOCC’s;
property rights to non-
resident owners Private corporations, individuals, estate and trusts,
whether large or non-large taxpayers
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b. Printing of the word The Supreme Court has ruled in several cases that the printing of the word “zero-
“zero-rated” required rated” is required to be placed on the VAT invoices or receipts covering zero-rated
sales in order to be entitled to claim for tax credit or refund.
c. Other documents In another case, failure of the taxpayer to indicate its zero-rated sales in its VAT
may be used to prove returns and in its official receipts is not sufficient reason to deny its claim for tax
“zero-rated” sale credit or refund when there are other documents from which the court can
determine the veracity of the taxpayer’s claims. (Southern Philippine Power Corp.
vs. CIR, G.R. 179632, Oct. 19, 2011)
d. Unused Input Tax A VAT-registered person whose registration has been cancelled due to retirement
of Person Who Retired or cessation of business, or due to change in or cessation of status may, within 2
or Ceased Business years from the date of cancellation, apply for the issuance of a tax credit certificate
for any unused input tax which he may use in payment of his other internal
revenue taxes. He shall be entitled to a refund if he has no internal revenue tax
liabilities.
e. Period of Refund or Refund or tax credit certificate shall be granted within 90 days starting January 1,
Tax Credit of Input 2018 (within 120 days before TRAIN) from the date of submission of the official
Tax receipts or invoices and other documents in support of the application filed.
However, all claims for refund/tax credit certificate filed prior to January 1, 2018
shall still be governed by the one hundred twenty (120)-day processing period.
Provided, That should the Commissioner find that the grant of refund is not
proper, the Commissioner must state in writing the legal and factual basis for the
denial.
f. Appeal of full or “In case of full or partial denial of the claim for tax refund, the taxpayer affected
partial denial may, within thirty (30) days from the receipt of the decision denying the claim,
appeal the decision with the Court of Tax Appeals: Provided, however, That
failure on the part of any official, agent, or employee of the BIR to act on the
application within the ninety (90)-day period shall be punishable under Section 269
of this Code.
g. Manner of Giving Refunds shall be made upon warrants drawn by the Commissioner of Internal
Refunds Revenue or by his authorized representative without the necessity of being
countersigned by the COA Chairman.
7. Caselets
a. Elirie Corporation, VAT-registered, has the following transactions during the month of January, 2018:
Domestic sales, exclusive of VAT P 800,000
Importation of goods for sale 240,000
Importation of goods for personal use 100,000
Purchase of office supplies, exclusive of VAT 20,000
Purchase of office equipment, total invoice price (estimated life is 3 years) 1,680,000
Purchase of home appliances for the residence of Elirie Corp’s President., gross of VAT 17,920
Payment of services for store repair, contractor not VAT- registered but issued VAT
officeial receipt (total invoice amount) 33,600
Purchase of services for repainting of store (evidenced by ordinary receipt issued by
contractor) 4,480
Purchase of real property to be used as office, VAT not included, purchase price not paid
yet 500,000
Purchase of vehicle for land transport and for business use, net of VAT 1,200,000
Payment of maintenance expenses for vehicle for land transport, net of VAT 50,000
Question
1 – How much of the VAT on importation can be claimed as input tax credit?
2 – How much of the input tax on purchase of office equipment can be claimed as input tax credit?
3 – Can the passed-on VAT on purchase of vehicle for land transport be claimed as input tax credit? Why or
why not?
4 – Can the passed-on VAT by a service contactor who is not VAT registered be claimed as input tax credit?
5 – How much is the total allowable input taxes for the month?
END
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