BUSINESS TAX •
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Business Registration: o VAT, if gross receipts/sales is more than P1,500,000/year o NON-VAT, if gross receipts/sales is not more than P1,500,000/year and opted as Non-VAT Documentation: o Commercial invoice to be issued for the sale of goods. o Official Receipts to be issued for the amount of cash received. In case of VAT Invoice/Receipt o the amount of VAT shall be shown as a separate item in the face of the document. o A statement that the seller is VAT registered followed by the TIN o The word VAT exempt is written prominently if the sale is VAT exempt o The word ZERO rate is written prominently prominently if the sale is Zero rated Sale of P1,000 or more, indicate the name, address and TIN of the buyer. o
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Business Taxes: o Excise Tax, on production or importation of “Sin” products Payabl Payable e befor before e transf transfer er from from factor factory y place place or before before releas release e from from custom house o On Business transactions: VAT OPT o Tax base: Gross sales, (cash or credit, inclusive of excise tax if any), taxable when sold Deemed sales (valued at fair market value or value determined by the BIR Commissioner) Gross Receipts, (exclusive of Collectibles) taxable when collected
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Excise taxes are generally levied in the stage of production or importation of “SIN” products such as:
i. Distilled spirits spirits and other alcoholic beverages ii. Cigarett ettes an and ot other to tobacco pr product ucts iii. Automobiles iv. Manuf nufactured oils an and ot other fue fuells v. Mineral products vi. Luxur xury and non-e n-essential go goods Tax base: Gross Receipts, for rending of services and rent. o The point of taxation is the period when the collection is made. o Include deposits and advance payments, without restriction as to use. o Does not include receivables •
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Gross selling price, for the sale of goods. o The point of taxation is the period when the sale is made. Deem Sales transf transfer, er, use or consump consumptio tion n not in the course course of busine business ss of goods goods or proper properti ties es o originally intended for sale or for use in the course of business. o Distribution or transfer of inventory to shareholders or investors as share in the profits of the VAT registered person
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Distribution/transfer of inventory to creditors in payment of debt Consignment of goods if actual sale is not made within 60 days following the date such goods were consigned Retirement from or cessation of business with respect to inventories of taxable goods existing as of such retirement or cessation
Business Transactions: VAT taxable transactions: With creditable input, sold by VAT registered person Without Creditable input, if more than P1,500,000/year and sold by non-VAT person
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ZERO VAT rated, zero output with creditable input (refund) ( export sale of VAT registered person ) VAT exempt transactions: Export sale of Non-VAT person Specifically exempt from business tax under the code Specifically subject to OPT • • •
Sale or services to government, final tax of 5% or specific OPT
VAT Taxable transactions: a. on sale (Sec. 106) or gross receipts (Sec. 108) of VAT registered business b. on consumption/transfers by VAT registered business deemed sales, (Sec. 106B) c. on sale or gross receipts of Non-VAT registered business, selling or receiving more than P550,000/year. d. Franchise grantees of radio & television broadcasting with annual gross receipts of more than P10,000,000, (Sec. 119). e. Importation (Sec. 107), except those f. Payment of rent by resident to non-resident owners of foreign vessels or carriers. ZERO RATED transactions a. export sales by VAT registered person b. sale of gold to BSP c. sale by VAT registered person of goods, supplies and fuel to aircrafts and vessels engaged in international transport d. services rendered by VAT person to aircrafts and vessels engaged in international transport VAT Exempt (also exempt from 3% percentage tax) VAT Ruling 037-01 a. Sales: Sales or gross receipts principally for subsistence, (P100,000 and below per year). Real property not primarily held for sale to customers or held for lease in the ordinary course of trade or business or real property utilized for low-cost and socialized housing, house and lot and other residential dwellings valued at P2,500,000 and below Of cooperatives duly registered with the CDA Export sales by persons who are not VAT registered. b. Importation: Fuel, goods and supplies by persons engaged in international shipping or air transport operation Personal and household effects belonging to residents of the Philippines returning from abroad and nonresident citizens coming to resettle in the Philippines; provided, that such goods are exempt from custom duties under the Tariff and Customs Code of the Philippines Professional instruments and implements, wearing apparel, domestic animals, and personal household effects (except any vehicle, vessel, aircraft, machinery, other goods
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for use in manufacture and merchandise of any kind in commercial quantity) belonging to persons coming to settle in the Philippines, for their own use and not for sale, barter or exchange, accompanying such persons, or arriving within 90 days before or after their arrival, upon the production of evidence satisfactory to the Commissioner, that such persons are actually coming to settle in the Philippines and that the change of resident is bon fide Sales and importation Agricultural and marine food products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption; and breeding stock and genetic materials therefor Fertilizers, seeds, seedlings, fingerlings; fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets) Printing or publication of books and any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale which is not devoted principally to the publication of paid advertisements Services By Agricultural contract growers and milling for others of palay into rice, corn into grits and sugar cane into sugar Hospital and veterinary services subject to the provision of Sec. 17 of RA 7716 Educational services rendered by educational institutions, duly accredited by DECS and the CHED, and those rendered by government educational institution Services rendered by regional or area headquarters established in the Philippines by multinationals which act as supervisory, communications and coordinating centers for their affiliates, subsidiaries or branches in the Asia Pacific Region and do not earn income from the Philippines. transactions exempt under treaty export by non-VAT business Lease of residential unit with a monthly rental not exceeding P10,000
VAT system Out Put VAT, (Actual sales, Deemed sales or gross receipts) x 12% Less: Input VAT, 12% of Purchases from VAT person Payments of Services of VAT person Presumptive Input VAT of 4% of Prime materials for o Cooking oil, sugar, sardines, mackerel, instant noodle Transitory input Vat of 2% of Beginning inventory as 1st time VAT Importation: o Of goods /supplies for business use o Of capital goods, more than P1,000,000/60 months Mixed Transactions A VAT person who is also engaged in transactions not subject to VAT shall be allowed INPUT tax credit as follows: o total input tax which can be directly attributed to transactions subject to VAT(except VAT taxable sales/receipts to government units o a ratable portion of any input tax which cannot be directly attributed to either activity( VAT taxable and Vat exempt) The INPUT vat shall be allocated proportionately on the basis of the sales volume.
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OPT
30% for gross receipts from jai-alai, race tracts 18% for gross receipts from cockpit
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15% for gross receipts from professional basketball games 10% from gross receipts from international and oriental boxing championship 10% on gross receipts from overseas dispatch originating from the Philippines 10% on insurance premium collected by gents of foreign insurance co’s. 10% on winnings in horse races, net of cost of tickets 5% on insurance premium directly paid by the owner of property insured directly in foreign insurance co. not doing business in the Phil. 5% on insurance premium of life insurance policy 3% on gross receipts of domestic common carriers by land on transport of passenger 3% on gross receipts within by foreign international carriers 3% on gross receipts of radio/TV broadcast franchise holder, not exceeding P10,000,000/year 2% on gross receipts within of water and gas franchise holder Banks: Interest income, 5% if maturity is less than 5 years and 1% if maturity is more than 5 years Other gross receipts, 7% Shares of stocks transactions: Original issuance, ½% of selling price IPO: o 4% if IPO is 25% or less of outstanding o 2% if IPO is >25% to 33 1/3% of outstanding o 1% if IPO is > 33 1/3% of outstanding •
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Business tax returns: o VAT, form 2550: Monthly, for 1st 2 months of quarter = within 2oth of the month following the taxable month Quarter, within 25 th of the month following the taxable quarter o OPT, form 2551: With in 20th day of the month following the close of taxable month Except: INITIAL Stock transactions, within 5 days from date withheld IPO, WITHIN 30 DAYS FROM DATE OF LISTING
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