TAXATION POWERLINES/ transfer/Donor/
Constructive exports
a) Sales to bonded manufacturing warehouses of export-oriented manufacturers b) Sales to export processing zones c) Sales to enterprises duly registered and accredited with the Subic Bay Metropolitan Authority pursuant to R.A. 7227-
FOREIGN CURRENCY DENOMINATED SALE? Requisites?
Requisites: 1. The buyer must be a non-resident; 2. The goods sold must be assembled or manufacturedin the Philippines; 3. Goods sold are to be delivered to a resident of the Philippines; and 4. Paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP.
VAT-EXEMPT TRANSACTIONS
These refer to the sale of goods or properties and/or services and the use or lease of properties that is not subject to VAT (output tax) and the seller is not allowed any tax credit of VAT (input tax) on purchases. The person making the exempt sale of goods, properties or services shall not bill any output tax to his customers because the said transaction is not subject to VAT
How to be a subject of Zero tax rate? Purpose
To be subject to zero tax-rate, however, the seller must be a VAT-registered person because if he is not VAT registered, the transactions entered into by him are exempt from the tax. Purpose: To exempt the transaction completely from VAT previously collected since input taxes passes to him may be recovered as refund or credits, 184
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UST 2017
Effect of VAT exempt purchases to input tax
VAT exempt transactions cannot be credited for input tax. However, a transaction which cannot be directly attributed in either the taxable or exempt activity, a ratable portion of the input tax may be credited.
VAT ON SERVICES Zero-rated Sale of Services
While it is true that the VAT is an indirect tax, it is clear from the agreement that WHO is "exempt from all direct and indirect taxes." Since the 12% VAT is an indirect tax whose burden was shifted by PCC to WHO then it is evident that the BIR is not correct To allow the shifting of the burden to WHO would negate its exemption and in violation of the international agreement entered into by the Philippines.
Input tax not a property right under the Due Process Clause
A VAT-registered person's entitlement to the creditable input tax is a mere statutory privilege which may be limited or removed by law.
ZERO-RATED SALE OF GOODS. [FEE]
1. Export sales 2. Foreign currency denominated sale 3. Effectively zero-rated sales
IMPACT?
1. The one statutorily liable for the payment of tax, thus, the one who can avail of a tax refund. 2. The seller upon whom the tax has been imposed. He collects the tax and pays it to the government.
INCIDENCE?
1. The one who bears the economic burden (payment) of tax (VAT), the place at which the tax comes to rest 2. The tax is shifted to the final consumer or the buyer of the goods, properties, or services as part of the purchase price.
EXPORT SALES The term export sales means: [FINE GO]
1. The sale and actual shipment of goods from the Philippines to a FOREIGN country: a. irrespective of any shipping arrangement; and b. paid for in acceptable foreign currency or its equivalent in goods or services and accounted for in accordance with the rules and regulationsof BSP.—
Requirements to qualify for zero-rating
1. The services other than "processing, manufacturing or repacking of goods" must be performed in the Philippines, 2. That the payment for such services be in acceptable foreign currency accounted for in accordance with BSP rules, and that 3. The recipient of such services is doing business outside of the Philippines.
The following are transactions deemed sale and therefore subject to VAT: (CORD]
1. Transfer, use or consumption not in the course of business of goods or properties ORIGINALLY intended for sale or for use in the course of business (i.e.,when a VAT-registered person withdraws goods from his business for his personal use) —
Reason for electing VAT registration
A VAT-registered person who opted to be subject to VAT may avail of the input tax credit. The input tax is deducted from the output tax thereby reducing his tax liabilities but a VAT-registered person who opted to be exempt therefrom cannot avail of the input tax credit. Thus a VAT-registered person may choose to be subjected to rather than exempt from payment of VAT. NOTE: Oil companies are not exempt from the payment of excise tax on petroleum products manufactured and sold by them to international carriers (SC)
Rules on Export Sales
By a Non-VAT registered - VAT exempt By a VAT registered - VATable at 0% (zerorated)
Lease of residential unit
I will advise Emiliano that he is not required to register as a VAT taxpayer. His transactions of leasing residential units for an amount NOT exceeding P12,800? per unit per month are exempt from VAT irrespective of the aggregate amount of rentals received annually.
Input Tax
It means the VAT due on or paid by a VAT-registered person on importation of goods or local purchase of goods, properties or services, including lease or use of properties, in the course of his trade or business. It shall also include the transitional input tax and the presumptive input tax determined in accordance with the NIRC It includes input taxes which can be 1. directly attributed to transactions subject to the VAT, plus 2. a ratable portion of any input tax which cannot be directly attributed to either the taxable or exempt activity
Output Tax?
It means the VAT due on the sale or lease of taxable goods or properties or services by (1) any person registered or (2) required to register under NIRC. Output tax is what the taxpayer-seller passes on to the purchases. Note that what is output tax for the seller is input tax to the purchaser Output tax may come from: i. Actual sale; ii. Transaction deemed sales
Cross Border Doctrine?
NO VAT shall be imposed to form part of the cost of the goods destined for consumption OUTSIDE 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 VAT
Rationale for zero-rating exports sale
The Philippine VAT system adheres to the cross border doctrine, according to which, 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.
Proceeds of Life Insurance Policy
The estate tax is a tax on the privilege enjoyed by an individual in controlling the disposition of her properties to take effect upon her death. The P10M is not a property existing as of the time of decedent's death; hence, it cannot be said that she exercised control over its disposition. Since the privilege to transmit the property is not exercised by the decedent, the estate tax cannot be imposed thereon.
REFUND OR TAX CREDIT OF EXCESS INPUT TAX Who may claim for refund/apply for issuance of tax credit certificate?
The following can avail of refund or tax credit: 1. Zero-rated and effectively zero-rated sales - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated; 2. Cessation of business or VAT status - A person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under the NIRC
Destination Principle?
The goods and services are taxed only in the country where these are consumed
FOREIGN CURRENCY DENOMINATED SALE?
The phrase 'foreign currency denominated sale' means sale to a non-resident of goods, except those mentioned in Sections 149 and 150, assembled or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP (NIRC). NOTE: Section 149 refers to excise tax on automobiles. Section 150 refers to excise tax on non-essential goods.
EFFECTIVELY ZERO-RATED TRANSACTION
The term "effectively zero-rated sale of goods and properties" shall refer to the local sale of goods and properties by a VAT-registered person to a person or entity who was granted indirect tax exemption under special laws or international agreement. Since the buyer is exempt from indirect tax, the seller cannot pass on the VAT and therefore, the exemption enjoyed by the buyer shall extend to the seller, making the sale effectively zero-rated
What will a zero-rated seller become?
The zero-rated seller becomes internationally competitive by allowing the refund or credit of input taxes that are attributable to export sales
TRANSACTIONS DEEMED SALE? 182
There is no actual sale of goods that took place but suchvtransactions are subject to VAT. In a transaction deemed sale, the input VAT was already used by the seller as a credit against output VAT. However, since there was no actual sale, no output VAT is actually charged to customers. Consequently, the State will be deprived of its right to collect the output VAT. To avoid the situation where a VAT registered taxpayer avail of input VAT credit without being liable for corresponding output VAT, certain transactions should be considered sales even in the absence of actual sale
Exception to the destination principle?
Zero percent VAT rate for services that are performed in the Philippines, "paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP
Zero-rated vs. VAT-exempt transactions
Zero-rated - It generally refers to the export sale of good and supply of services. The output tax rate is set at zero. When applied to the tax base, such rate obviously results in no tax chargeable against the purchaser. VAT-exempt - In VAT-exempt sales, the taxpayer/seller shall not bill any output tax on his sales to his customers and corollarily, is not allowed any credit or refund of the input taxes he paid on his purchases.
ZERO-RATED SALES?
Zero-rated sale by a VAT-registered person is a taxable transaction for VAT purposes but the sale does not result in any output tax. However, the input tax on the purchases of goods, properties or services related to such zero-rated sale shall be available as tax credit or refund.
