TAXATION 2 Chapter 11 Output VAT Regular

BUSINESS AND TRANSFER TAXATION 2019
Chapter 11
OUTPUT VAT
SOURCES OF REGULAR OUTPUT VAT
1. Sale of Goods
2. Sale of Services
3. Sale of Properties
4. Transactions deemed sales
Sales of goods and services to senior citizens and persons with disability (PWD) by covered
establishments
It must be recalled that the sales to senior citizens are exempt from VAT. However, the amount of sales to
PWD, net of the discount, is subject to VAT.
SALES OF PROPERTIES
Types of sale of properties: Taxability

1. Sale by a dealer, developer or lessor of real properties Vatable
2. Sale of properties considered ordinary assets Vatable
3. Sale of properties not in the course of business Exempt
Under the NIRC, the fair value of real property is the higher between the:
a. Zonal value; and

b. Assessed value.
TRANSACTIONS DEEMED SALES
There are transactions which are acquisition (i.e. consumption) in nature but are not coursed through a
purchase transaction by the consumer. Consequently, these transactions are not recorded as sales by the
seller. Nevertheless, since these transactions are forms of taxable consumptions, they are considered
“deemed sales” for VAT purposes.
List of Transactions deemed sales:
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.
2. Distribution or transfer to:
a. Shareholders or investors share in the profits of VAT-registered persons.
b. Creditors in payment of debt or obligation.
3. Consignment of goods if actual sale is not made within 60 days following the date such goods were
consigned.
4. Retirement from or cessation of business with respect to all goods on hand whether capital goods,
stock in trade, supplies or materials as of the date of cessation, whether or not the business is
continued by the new owner or successor.
5. Cessation of status as a VAT-registered person.
SUMMARY OF OUTPUT VAT RULES
Source of Regular Timing of reporting

VAT base
Output VAT of VAT
Sale of Goods Gross selling price, but fair In the month sale
value if selling price is
unreasonably lower
Sale of Services Gross receipts In the month collected
Sale of real properties Gross selling price (higher of fair In the month of sale or spread
value or selling price) throughout the collection period
under the installment method
Transactions deemed sales Fair value of the deemed sale In the month deemed sold
Chapter 11 – Value-Added-Tax (Output VAT) Page 1

BUSINESS AND TRANSFER TAXATION 2019
EXERCISES – Computation of Output VAT
1. A VAT-registered car dealer sold the following goods to a relative:
Selling price P300,000

Market Value 500,000
2. A VAT-service provider prepared the following lists of cash collections during a month:
Gross receipts inclusive of VAT P 504,000

Client advances 200,000
Proceeds of bank loan 300,000
Total P1,014,000
3. A VAT-registered practicing lawyer disclosed the following during the month:
Total professional fees billed P800,000

Total professional fees collected 600,000
Advances by certain clients 200,000
4. A VAT-seller of goods billed the following to a customer:
List price P800,000

Trade discount 125,000
Net price P675,000
The credit term for the sale was 2%/15, n 60 days. How much is the output VAT?
5. A restaurant which also caters for special events had the following data which may be relevant in filing
its BIR Form 2550M:
Gross receipts from customers P500,000

Gross receipts from advanced reservations 50,000
Client balances evidenced by promissory note 70,000
Total P620,000
6. A VAT-seller indicate the following in a VAT Invoice evidencing the sale of vegetables:
Selling price P5,000

Output VAT 600
Total Amount due P5,600
7. A real property dealer sold an agricultural lot for P2,500,000 with the following values:
Appraisal value P3,000,000

Zonal value 2,000,000
Assessed value 1,500,000
8. Delfin Corporation, a security dealer, declared the following dividends in March 2015.
Cash dividend P1,200,000

Property dividend 800,000
The property dividend represents various merchandise inventories.
9. A VAT-registered farm supply dealer sold the following during a month:
Fertilizers P 200,000
Corn seeds 250,000
Farm equipment 1,200,000
Pesticides 300,000
Total P 1,950,000
10. A VAT-taxpayer made the following sales during the quarter:

Domestic sales:
Sales of VAT-exempt goods P1,200,000
Sales of vatable goods 900,000
Export sales 800,000
Chapter 11 – Value-Added-Tax (Output VAT) Page 2

TAXATION 2 Chapter 11 Output VAT Regular

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BUSINESS AND TRANSFER TAXATION 2019

Types of sale of properties: Taxability

a. Zonal value; and

TRANSACTIONS DEEMED SALES

List of Transactions deemed sales:

SUMMARY OF OUTPUT VAT RULES

Source of Regular Timing of reporting

Chapter 11 – Value-Added-Tax (Output VAT) Page 1

1. A VAT-registered car dealer sold the following goods to a relative:

Selling price P300,000

Gross receipts inclusive of VAT P 504,000

3. A VAT-registered practicing lawyer disclosed the following during the month:

Total professional fees billed P800,000

4. A VAT-seller of goods billed the following to a customer:

List price P800,000

Gross receipts from customers P500,000

Selling price P5,000

Appraisal value P3,000,000

Cash dividend P1,200,000

The property dividend represents various merchandise inventories.

9. A VAT-registered farm supply dealer sold the following during a month:

10. A VAT-taxpayer made the following sales during the quarter:

Chapter 11 – Value-Added-Tax (Output VAT) Page 2

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