How to compute Value Added Tax (VAT) payable in the Philippines? Any person or entity who is engaged in trade, business or in the practice of profession may be liable to business taxes. Business taxes can be either a Percentage tax or a Value Added Tax. Furthermore, a taxpayer can be a VAT registered or a Non-VAT registered taxpayer. In this article, we will tackle how to compute VAT Payable and file the monthly and quarterly VAT returns.
What is a Value Added Tax?
Value-Added Tax is a business tax in the form of sales tax. It is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines and on importation of goods into the Philippines. It is an indirect tax, which may be shifted or passed on to the buyer, transferee or lessee of goods, properties or services.
Who Are Required To File VAT Returns
The following persons or entities are required to file VAT returns:
1. Any person or entity who, in the course of his trade or business, sells, barters, exchanges, leases goods or properties and renders services subject to VAT, if the aggregate amount of actual gross sales or receipts exceed P1,919,500 (RR 16-2011, RR 3 -2012), as amended.
2. A person required to register as VAT taxpayer but failed to register
3. Any person, whether or not made in the course of his trade or business, who imports goods
Who may opt to register as VAT and what will be his liability?
1. Any person who is VAT-exempt under Sec. 4.109-1 (B) (1) (V) not required to register for VAT may, in relation to Sec. 4.109-2, elect to be VAT-registered by registering with the RDO that has jurisdiction over the head office of that person, and pay the annual registration fee of P500.00 for every separate and distinct establishment.
2. Any person who is VAT-registered but enters into transactions which are exempt from VAT (mixed transactions) may opt that the VAT apply to his transactions which would have been exempt under Section 109(1) of the Tax Code, as amended [Sec. 109(2)].
3. Franchise grantees of radio and/or television broadcasting whose annual gross receipts of the preceding year do not exceed ten million pesos (P10,000,000.00) derived from the business covered by the law granting the franchise may opt for VAT registration. This option, once exercised, shall be irrevocable. (Sec. 119, Tax Code).
4. Any person who elects to register under optional registration shall not be allowed to cancel his registration for the next three (3) years.
The above-stated taxpayers may apply for VAT registration not later than ten (10) days before the beginning of the calendar quarter and shall pay the registration fee unless they have already paid at the beginning of the year. In any case, the Commissioner of Internal Revenue may, for administrative reason deny any application for registration. Once registered as a VAT person, the taxpayer shall be liable to output tax and be entitled to input tax credit beginning on the first day of the month following registration.
What are the BIR forms used in filing VAT Returns?
VAT returns are filed monthly using the Monthly Value Added Tax Declaration Return BIR Form 2550M and quarterly using the Quarterly Value Added Tax Declaration Return BIR Form 2550Q. To download forms, please click here to go to the BIR forms download page.
How to compute Value Added Tax Payable
Value Added Tax Payable is normally computed as follows:
1. Computing Net VAT Payable on VAT “exclusive” Sales/Receipts
Total Output Tax Due or Total Vatable Sales/Receipts x 12%
Less: Total Allowable Input Tax or Total Vatable Purchases x 12%
Equals: VAT Payable
Sample Computation of VAT Payable:
Let’s assume that,
Total Vatable Sales (VAT exclusive) = P100,000
Total purchases with VAT receipts (VAT exclusive) = P70,000
P100,000 x 12% or P12,000
– P70,000 x 12% or P8,400
VAT Payable = P3,600
2. Computing Net VAT Payable on VAT “inclusive” Sales/Receipts
Total Output Tax Due or Total Vatable Sales / 1.12 x 12%
Less: Total Allowable Input Tax or Total Vatable Purchases / 1.12 x 12%
Equals: VAT Payable
Sample Computation of VAT Payable:
Example based on the above assumption:
Total Vatable Sales (VAT inclusive) = P112,000
Total purchases with VAT receipts (VAT inclusive) = P78,400
P112,000 /1.12 x 12% or P12,000
– P78,400 /1.12 x 12% or P8,400
VAT Payable = P3,600
Or an alternative computation:
P112,000 /9.333 or P12,000
– P78,400 /9.333 or P8,400
VAT Payable = P3,600
Output tax means the VAT due on the sale, lease or exchange of taxable goods or properties or services by any person registered or required to register under Section 236 of the Tax Code.
Input tax means the VAT due on or paid by a VAT-registered on importation of goods or local purchase of goods, properties or services, including lease or use of property in the course of his trade or business. It shall also include the transitional input tax determined in accordance with Section 111 of the Tax Code, presumptive input tax and deferred input tax from previous period.
Total Vatable Purchases are your total purchases from VAT registered suppliers. This should be supported with VAT receipts.
Note:
VAT exempt sales, zero rated sales, purchases not qualified for input tax, and other input taxes (if any) should also be shown in the VAT returns. See BIR Forms.
How, when and where to File VAT Returns?
Documentary Requirements
1. Duly issued Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307), if applicable
2. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax At Source (SAWT), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. Duly approved Tax Credit Certificate, if applicable
5. Authorization letter, if return is filed by authorized representative.
Procedures
1. Fill-up BIR Form No. 2550M (for monthly VAT declaration) or 2550Q (for quarterly VAT declaration) in triplicate copies (two copies for the BIR and one copy for the taxpayer)
2. If there is payment: File the Monthly VAT declaration, together with the required attachments, and pay the VAT due thereon with any Authorized Agent Bank (AAB) under the jurisdiction of the Revenue District Office (RDO)/Large Taxpayers District Office (LTDO) where the taxpayer (head office of the business establishment) is registered or required to be registered.
The taxpayer must accomplish and submit BIR-prescribed deposit slip, which the bank teller shall machine validate as evidence that payment was received by the AAB. The AAB receiving the tax return shall stamp mark the word “Received” on the return and machine validate the return as proof of filing the return and payment of the tax.
In places where there are no duly accredited agent banks, file the Monthly VAT declaration, together with the required attachments and pay the VAT due with the Revenue Collection Officer (RCO) or duly authorized Treasurer of the Municipality where such taxpayer (head office of the business establishment) is registered or required to be registered.
The RCO or duly authorized Municipal/City Treasurer shall issue a Revenue Official Receipt upon payment of the tax.
3. If there is no payment:
File the Monthly VAT Declaration, together with the required attachments with the RDO/LTDO/Large Taxpayers Assistance Division, Collection Agent or duly authorized Municipal/ City Treasurer of Municipality/City where the taxpayer (head office of the business establishment) is registered or required to be registered.
Deadline
Monthly VAT returns BIR Form 2550M:
Not later than the 20th day following the end of each month (manual filing)
Quarterly VAT returns BIR Form 2550Q:
Within twenty five (25) days following the close of taxable quarter (manual filing)
For EFPS filing, please visit the BIR website for detailed and updated dates of deadlines.
Reference:
BIR Tax information on Value Added Tax
Sections 105 to 115 of the National Internal Revenue Code of 1997, as amended
Disclaimer: New and subsequent BIR rulings, issuances and or laws may render the whole or part of the article obsolete or inaccurate. For more information, please inquire or consult with the BIR.
Victorino Q. Abrugar is a marketing strategist and business consultant from Tacloban City, Philippines. Vic has been in the online marketing industry for more than 7 years, practicing problogging, web development, content marketing, SEO, social media marketing, and consulting.
Hi, we are into the glass and aluminum business. Specifically, installer/contractor of glass and aluminum products in residential & commercial areas.
Some years ago, our accountant asked us to change our line of business to general merchandise to lessen the mayor’s permit payment even if in the BIR Form 2303 our line of business/industry remained at 7499 Other Business, Activities, N.E.C. However, it didn’t served its purpose.
Do you think we should change back to “installer” instead of “gen merchandise” (mayor’s permit)? Thanks very much.
Hi. There should be consistency and substance. Meaning your BIR certificate, Mayors Permit and actual line of business should be tallied to avoid future problems.
Thanks very much.
Sir Vic, Output VAT po ba ay kinokompyut based sa Gross Sales on Accrual basis (not cash basis)?
ganundin po sa Input VAT on Purchases..?
tnx
If your company is using accrual as the consistent and standard/acceptable accounting method, then use accrual. It can either be based on what you receive or what your customers are obligated to pay to you (depending on the accounting method your company is using or is required by certain accounting principles/ or laws) . Please check Sec. 4. of the Republic Act No. 9337, as amended. Just remember the consistency principle of accounting. Also your method of computing your output should match your method of computing input – it cannot be inconsistent. You may also inquire the BIR for confirmation.
Sir, I thought the title ‘gross sales’ is applicable only for merchandising companies..? While ‘gross receipts’ for servicing firms.. ?
Please check corrected reply above. You can also try to spend some time to read the previous comments we have discussed in the earlier comments (I think a similar question have already discussed). Please bear with me since I am receiving lots of comments/questions/email – and I still need to write and publish blog posts for everybody. So I may not be able to entertain all questions with the limited time I had – especially those who want me to extensively compute their tax payable 🙂 Thanks.
I thought the bureau doesn’t compute taxes based on income under accrual method most of the time. Cash basis instead!
Well, tnx for the information sir. More power!
Sir, ask ko lang po paano ko ma le-less yong mga purchases ko online like from Alibaba. wala kasing local parts kaya sa china ako online bumibili. Wala po akong OR ng purchases ko mga invoice lang and and ang OR ko lang is yong sa local courier. (like DHL) Paano po ba ito pwedeng ma less? salamat and more power
You may use those invoices to substantiate and support your expenses.
thank you very much po and godbless
Sir i forgot to ask po pala, since my technician ( computer repairs) is my brother i am paying him for every repaired units but since this is within the family( small scale repair ), how can i include this on my expenses, i dont give him receipts or anything as proof ng payment ko sa labor rendered nya, sa case po na ito ano yong pwede kong gamitin as proof ng labor payment ko sa kanya para sana maibawas ko kahit papaano. VAT registered nga po pala kami. Maraming salamat po uli.
Hi Gina, I fear that you may not be able to deduct that onein strict implementation of the documentation. Maybe you look at the aspect of OSD for income tax purposes.
Sir,
Ask ko lang ano po ba ung transitory input tax? and do i need to fill up all the boxes in the 2550 form?.. pwede po bang total na lang ng sales & purchases nalang ilagay q, kesa i specify q kung what type of purchases ung included?
pa help naman po.. tnx.
Transitional input vat applies to non-vat registered becoming vat for te first time. In strict aplication you have to specify the source of purchases, while on liberal application for as long as you could substantiate the input vat claimed, it may not be much of an issue. Thanks Cath
Hi Sir Vic/Ghar,
Please help me to understand this problem –> Our company (corporation) is engage in the business of wires and cables and accept sub-contracting of the same for export market, we get paid through remittances (we only have one customer and it based in scotland). How could we declare our income? if we only receiving an amount based on the actual expenses of the company. Do we need to ask an additional amount for the VAT to our customer? Last year, we are non-vat registered but im confused because our annual gross receipts is exceeding 1.5M that’s why i ask our external auditor. she said, change our tax type from non-vat to vat and apply a zero rated to BOI but then our application is denied. i informed again our auditor regarding this matter and she said try to change again your tax type from vat to non-vat because you will paying a huge amount of tax? after that, im in puzzled.. Hope you give time to read and answer my queries.. Thank you and more power.
Hi Cath, let me answer you breifly. First, it does not need boi registration to be zero rated on export sales. Second, the 1.5m is now 1,919,500 from jan 2012. Third, consider changing auditor or adding new tax consultant before its too late to waste your income on penalties for tax misapplication. Thanks
Good day Ma’am Belle,
Im Celina not Cath :-).. anyway, thank you so much for the brief yet informative answer. This is my first time to seek an advise through net and you answered it instantly. A big thanks to you and all up there in TaxAcctng Center for helping people like us.. Godbless us.
Hello,
I am starting a business with a supplier in Phils. i will be importing product into Saudi Arabia. This supplier exports and sells in Phils. we have agreed the price of the product i’m buying, and now the supplier is passing on VAT of 12% to me. is that correct?
Hi Sir Vic!
I have some questions again, hope it’s okay. We’ve only been deducting the creditable tax withheld at source from the income tax due in the ITR. Do we need to deduct it too from the output tax due when filing for 2550M? We have a customer that pays withholding tax only. Example: 75k is the total price. They automatically withhold around 670 pesos from us, so we only receive 74,330 for merchandise sold. Since we’re VAT registered, we have to pay VAT but we don’t charge them with VAT. We’re shouldering the VAT instead. Can we pass on the burden of paying VAT to this particular client even if they’re already paying tax (as per the tax withheld)? Or shouldn’t we be paying VAT at all for this particular transaction? If yes, how do we file it with the BIR? Do we need to have a document declaring it as a non-VAT transaction? If yes, where can we get it? Can we apply for tax credits if it’s deemed that we should have not paid VAT for this?
Once again, thank you so much for your help! More power to you and the website!
Hi Lar, I see a big confusion in you for the application of Vat and withholding tax and income tax. I suggest you participate our seminars and trainings so you will see a bigger picture to manage your tax compliance. How I wish I could answer you here but it would involve a lengthy one for all your questions. Just one thing to note, withholding tax is for income tax and is not related to vat.
Hi Sir..What is the meaning of the phrase indicated on a VAT receipt? It goes like this. “NOT VALID AS A SOURCE OF INPUT TAX”. Does it mean I will not recognize any input tax? Because If i were to ask, I will just simply debit the asset/expense account ignoring any VAT. I just want to get a clear second opinion. Thanks.
Hi Andrew! I’m not an accountant but I will try to answer your question… I think all of the Official Receipts now are stamped with “NOT VALID AS A SOURCE OF INPUT TAX”. It just means as it says. The BIR doesn’t recognize the OR as a source of input tax anymore. When you purchase something from a supplier, ask for a Sales Invoice instead. Hope it helps. 🙂
It follows this rule for input VAT claim- sales invoice for goods and official receipts for services. Thus, if invoice is issued for services, instead of official receipts, the same could not be a valid sourceof input tax though may not necessarily mean that the same is without VAT. Thanks!
Hi! can u please give me an example on how to compute vat payable. I have an exempt sale, sales to govt and to private. purchases were not directly attributable.
Thanks!
Hi Norman,
I apologies, I could not do it as it would involve a very lengthy explanation and will take too much space for the admin. Nevertheless, we do have a one-day program that deals on purely VAT matters and i am pretty sure your concerns will be enlightened.
Thanks
Hi Sir/s:
First time ko po na magfile as self-employed professional, sana matulungan nyo po ako. I already asked an officer during the day in the RDO but was not able to help me with the computation, sabi po sakin, magtanung-tanong ako. I was assessed to be considred VAT Registered pero Zero-rated kasi po ang income ko comes from the service I render sa isang foreign-company (online service). How should I fill out the 2550M, let’s say, if I receive 18k as payment (through inward remittance) and my only expense would be the internet fee at 1k inclusive of VAT? How should I fill the form correctly?
Thank you so much in advance!
Hi Joyce. I am inviting you to our Bir compliance seminar workshop so will learn much about Vat, income, and other tax returns you are ought to file relative to your online business. Please visit us at our site for details and schedules. Thanks.
Sir,ask ko lang magkano ang monthly pay na exempted sa tax?is it base on daily minimim wage or may certain monthly amount po para pwedeng mag apply ng tax exemption. Ano po yong form na gagamitin ko in filling (confused between 1901 and 1902).
Marami pong salamat.
Hi Gina. It is 426 a day in Metro Manila and pure compensation income uses 1902. Thanks
Hi, we are into selling truck parts – retail and wholesale, some of our customers are from the provinces which can be reached by our local buses. They would ask us to send the ordered parts via bus so we charged a small freight charge fee for the delivery. Should the freight charges be included in the total sales? Is it VATable? Please advise. Thanks!
Hi Roger, If you take it as an expense that would form part of your income and as such taxable. If you simply pass it on to the buyer, then, not taxable on your part. Thanks.
Sir,
Magandang gabi po. mag tatanong lang po sana ako kung paano ang paraan ng pag kaltas ng tax sa mga 2nd hand sasakyang at 2nd hand furniture galing japan kung maibebenta namin. mag sisimula palang kame ng negosyo sir. please po paki sagot po.
marami pong salamat.
question? ano ung predominance test na sinasabi ng BIR? I’m currently providing services to client and my Gross receipts last year is 1.3M, this year may other income ako sa rental ng building ko na 25K/month or 300K..in short 1.6M or more than pa ang Gross Receipts ko this year, Ibig bang sabihin next year (2013) Vat Registered na ako? aapply ba dito ung predominance test kasi 1.3M ako sa profession then 300K lang ung building,,so NON-VAT paring ako despite na 1.6M ang TOTAL RECEIPT KO??… Pls i need your professional advice.. thanks
ganito nakalagay sa BIR website…
In determining the main or principal business of a taxpayer, we apply the predominance test. Under this test, if more than fifty (50%) of its gross sales and/or gross receipts comes from its business/es subject to VAT, its main/principal business falls within the VAT system making its status as a VAT person. Otherwise, he can not be considered as a VAT person eligible for the election provided for under Section 109(2) of the Tax Code.
If you are a sole prop, then the simple test is if your total sales or receipts from both profession and leasing exceeds P1,919,500 for you to become a vat-registered taxpayer. Predominance test may not apply as Section 109(2) speaks of exempt transactions.
I think ung P1,919,500 applies if residential ung paparentahan,,commercial bldg po ung sa akin..Please paki clear po.naconfused po ako..then paki elaborate din ung Predominance Test, medyo malabo po..thanks in advance..
You might be barking a wrong tree Bryan. I can have you met with some friends to clear your doubts and ask more questions going forward with the VAT application. They have office in Pasay and you may drop by sometime if you would wish. Are you in Metro Manila?
hi! our company has 3 sets of receipts: sales invoice, charge invoice, and official receipt. We are a provincial telco distributor. for cash transactions, we issue sales invoice, for sales on account, we issue charge invoice, and then we issue OR upon collection. In our subsidiary sales journal from BIR, we record sales invoice and official receipt, instead of charge invoice, thus there are timing differences. We use the amount totals as basis of our VAT returns. now, we are preparing the FS, my concern is we are to recognize AR, I know there are problems I would be encountering, please help me with it. we are going to close the company because we are also experiencing losses. Your response will be very much appreciated. thank you so much!
Hi Chari. Here is the simple rule for VAT – seller of service base its VATable amount on VAT official receipts, and seller of goods base its VATable amount on VAT invoice, cash or charge. Timing difference is much on service because FS will consider statement of account under accrual basis of accounting while VAT will still be based on receipts – ORs issued normally. This is but normal and may not be a basis for closure unless misapplication is unmanageable now. Heavy losses with meager end view of brighter tomorrow may be a better determination for closure.
We may help you quantify the timing difference and see if the VAT application is proper. Please let us know then.
thank you so much miss belle! how do we correct the VAT returns filed if correction is necessary? I have already called BIR Head Office, they told me to attach the charge invoices in my subsidiary sales journal but also instructed me to call our RDO, however our RDO didnt give me definite answer as to what should we do. Thank you so much in advance
You may need to see the materiality of the situation. They might have counterbalance upon collection. You can still amend the returns if no assessment has yet been made. I suggest you have it seen by some experts because I fear your amendment solution may add up more errors, thus, headaches.
Hi po Sir Vic., What if may sales is 100,00 and my total expenses on the said sales is at
75,000 what is the total amount that I will be paying in BIR.
Bago plng poh q ng-start ng business and I don’t know anything in BIR.
what are considered input tax? where can i find the list of acceptable input tax?
Hi Jon and Allen, I suggest you attend our Basic BIR compliance programs to develop a working knowledge in handling your tax compliance and avoid penalties. Please click on my name to reach our website for the schedules.
Hi I love your blog and your teachings, however I’m confused at the moment because of the information overload. I need your consultation on this. I only want to bring in 1 piece of Gadget that I will buy for 12orders 8k each. I will be charged Shipping cost, VAT and local TAX. my question is do I need to register as a company with BIR and DTI? i’ll only be selling gadgets part time. ? will I still pay more tax like income tax later?
As one engaged in trade or business, you are required to register with DTI- for sole prop, and with BIR for the taxes. It does not matter, whether part-time or full time, after all, its business. Taxes and business always go with each other, if you do not like to pay tax, then, either you evade to be imprisoned or you forget about business.
what term of payments if non-vat business?
Hi, kudos to your posts.
Question po on property sale vat – Are miscellaneous fees (normally 5-10%) part of gross Total Contract Price?
Miscellaneous fees include different taxes and payment to government agencies – I pressume you cannot vat over taxes already paid to the government?
Appreciate your reply.
If you gross them up with the contract price, then, no doubt it is subject to VAT. If is does not pertain to seller’s taxes and made only as reimbursement, then, I believe there could be no VAT on them.
hello! we have been operating for more than a year. however, it is just now that i have checked our sales invoice from our suppliers. however, the tin in the invoice is not our tin. What is the best thing to do? we are a distributor so we get all our purchases from that company only. thank you so much!
You may have to ask supplier to retrieve the receipts issued and ask for replacement with the correct TIN. Instruct your supplier to buy lens that they be able to write correct TIN numbers next time, or change suppliers with good eyes to see and write correct one.
Good Day Sir!
I’m working for a college Project, a Product Ordering System, and I’m Implementing
the VAT computation Formula.
I Need a Help for the Reason why the Following Computation doesn’t Tally.
– Order Details, Product Cost(w/o VAT)
Product
–Cost = 22.32
–Quantity = 1500
1,500 * 22.32 = 33,480.00 (w/o VAT)
33,480.00 * .12 = 4,017.6
33,480.00 + 4,017.6 = 37,497.60 (w/ VAT)
Another Computation, The Product Cost has 12% VAT included.
1,500 * 25 = 37,500.00 (w/ VAT)
37,500.00 / 1.12 * .12 = 4,017.86
37,500.00 – 4,017.86 = 33,482.14
Why is it that the WITH VAT results of the 2 computations are not the same?
Please i Need Help!
Discrepancy maybe attributable to the rounding off of 22.32 time 112% because it is not exactly 25.
5% is final VAT and could not be carried over to subsequent quarters, and your input of such amounts will be in such a way that no additional VAT liability will arise from sales to government.
How do we present the the sales to government in our VAT return? what is the treatment of 5% final VAT withheld if sales is already reported in the prior quarter?
Hi Ramil,
There are a number of fields in the VAT return that you should fill out and it might be a long explanation here. The concept of the various fields is to nuetralize the impact of input and output VAT because the 5% withheld by the government is final VAT and no other VAT liability shall arise on top of the 5%. We have a seminar on May 28 on all matters relating to VAT. Please click this link for easy reference – http://taxacctgcenter.org/programs/value-added-tax-in-and-out/.
Dear Kababayans;
I purchased a reefer van in Manila and have another trucking company to manage it and schedules to deliver the products of a meat wholesaler. The meat wholesaler adds 12% VAT payable to us. Should the trucking company keep the 12% VAT eventhough I am the one paying for all the expenses (e.g. gas, repairs, wages to driver and helper, fees, etc.)?
The projected sales is around P60,000 a month.
Please advice and thank you in advance!
Hi Conrad. In your scenario above, I sense two VATable transaction as follows – your VAN service to trucking company, and trucking company’s service to the meat dealers. Since the contract is between the trucking and meat dealer, I believe its just right that the trucking declares 12% VAT. If the VAN is under your sole prop account that is VAT registered, then, you should pass on 12% VAT also. You may attend our one-day seminar to know more about the VAT system.
Sir Vic, How much is the withholding tax for commission?
Thank you.
Hi Naomz. In general, its 10% expanded withholding tax under Revenue Regulations No. 2-98, as amended.
Ask lang when we make payments sa mga bayad center or bangko, normally may dala tayong billing galing sa establishment gaya ng sa kuryente, tubig, insurance or bill sa telephone. The bayad center provide “acknowledgement receipt” sa payment. However, walang na-issue na official receipt, wala rin dumating na OR galing sa companya na ng provide ng service or goods.. how do we treat this? Nagpunta ako sa mismong establishment asking for an OR, ang sagot sa akin- Doon daw kumuha ng OR kung saan nagbayad…
thanks
Hi Mike. They are not supposed to issue an O.R. because they are not receiving your payment as their taxable income. They only receive the amount in behalf of the utility company and it is still the utility company who is duty bound to issue O.R. I may suggest direct payment if you are after the O.R. as a better proof in claiming utility expense and input VAT.
Thank you for the valuable input. In fact, I asked the utility company to provide an O.R. by showing the “acknowledgement receipt” from the payment center and yet this company still not issuing an OR.
Then paying directly may be a good option moving forward.
Thank you for the suggestions. Sorry for making this discussion quite long, but it is interesting… and maybe this is happening to most of us.
In your suggestion to pay directly to the entity- they resist and instead divert payment thru other means, because their office do not accept payments.
So when presenting to them proof of payments from bayad centers – I have to make a written request for them to issue an OR. I have not yet done the writing, my question is….is it proper to make such request? As you have told, the entity is duty bound to give an O.R. Why as a customer should still make a request? What will happen if no O.R. for the payment transaction?
Request letter I believe, is for internal policy and convenience. It is their imposition and it may take you more time questioning than resorting to other options for practical considerations. Should there be no O.R., BIR may make it an issue as to substantiation for deductibility.
would u mind if i ask a sample of vat zero rated computation. thanks…..
regarding to my question above, our few customers requested to our co. to issue a zero rated vat, the problem is we/i don’t know how to compute it, all i know is the 12% vat,, please help so we/i can give our customers need… thank you
waiting for your answer…
don’t need to compute. Zero rated means no VAT should be added on the selling price. Just indicate in the invoice that the sales was zero rated.
Yes, Evelyn, agree with Albert. No required computation and you just reduce your price by the 12% VAT component so you do not pass-on VAT to the zero-rated buyer. Let me invite you to our VAT seminar this May 28, please click this link for details – http://taxacctgcenter.org/programs/value-added-tax-in-and-out/. Thanks.
Hi,
I just want ask a huge favor if you could help me in ruling out vat charged to non-vat company. I am currently working on training agency and the owner opt out for percentage tax since we just started early this year. We have vendors that are VATABLE and I would like to reiterate to the owner that our purchases from vatable sellers, the 12% vat charge to us will be considered FULL EXPENSE on our part. Is there a specific BIR ruling for this that I can quote to my superior for their better understanding? Thanks so much for the help. I really find this website very informative and helpful 🙂 Hope anyone could help me though 🙂
Hi Pia. Let me share thoughts. The 12% passed on to your training company from local purchases is but a proper imposition and may not be ruled out. The training company will have to pay the 12% passed on to it by VAT-registered supplier. Yes, the treatment under the regulations is treating the same as part of the cost of the asset purchased on part of the expense.
We invite you to attend our VAT, IN and OUT seminar on May 28, 2012 for more concerns on VAT application. Please click on my name for more details. Thanks.
Hi, i had registered my business this year. This will be my first time to issue a receipt. Please see my sample computation if its correct.
Output VAT:
Vatable Sales (2500 / 1.12) x 12% = 267.86
Input VAT:
Purchased of equipt. (525 / 1.12) x 12% = 56.25
VAT Payable: 211.61
Also, does the 2550M inputs differ from the 2550Q? or 2550Q is the cumulative inputs of 2550M? It was not discussed thoroughly by the accountant in BIR in the seminar, since the only concern they emphasized was the date of filing.
I’m really new to this and I’m not and accountant either. Thank you!
Hi Aya,
Is your business is seller of service or goods? to simplify if the company is seller of goods the basis for output vat is based on sales invoice and if the company is seller of service the basis for output vat is based on official receipt.
For question no. 2, 2550M refers to monthly vat return and 2550Q is for quarterly vat return, 2550Q is the consolidation of 1st and 2nd month together with 3rd month (quarter).
question lang po..is it ok if our basis for output vat is on collection?bases on seller of goods. thankz a lot..
hi sir vic
may question lng po ako regarding sa computation ng monthly VAT at Quarterly VAT pag negative ang payment last month or last quarter?
Thank you po…..
Grace
hi,
Ask ko lang if yung Input Tax ba eh yung direct related lang sa sales?
kasi we sub-con the services. Pano ang treatment dun sa other purchases ng company na may input tax?
Thank you in advance.
hi!
can EWT’s or form 2307 be immediately deducted from 2550M? What are the allowable VAT deductions for VAT registered consultants for filing their monthly VAT?
Thank you,
Candie
i would like to ask regarding what is the deadline for the adjustment in 2550M in the month of may and what will i do to amended return
With regards to sales declared in income tax return, is it inclusive or exclusive of vat? thanks…
Hello, ask ko lang po sana ano ang simplified explanation ng ledger versus journal.Marami pong salamat.
Hi Gie, Sa Journal lahat ng transactions nakasulat. Sa ledger, summary ng transaction ng kada account title. We have a Basic Business Accounting seminar workshop, you may want to join. Thanks
Good day
For a convenience store, should the food products (lutong ulam) cooked by the owner himself be sold with VAT, notwithstanding that all the ingredients came from the wet market which are not subjected to VAT?
Thanks and more power.
HI Sir vic,
Ask ko lang po, anu po ba ang advisable, or valid na gwin? kung halimbawa na gusto paliitin ung vat payment for the quarter.. which is advisable po? mag Accrue ng Purchases? or Mgdeferred ng Sales? Please help po.. Thanks
Please also be aware of VAT exemption as your guide to your business
http://www.foreclosurephilippines.com/2011/11/threshold-for-vat-exemptions-to-be-increased-effective-january-1-2012.html
Nag-bebenta kami ng sportswear
Nag-ooffer din po kami wall climbing
Example:
200 total amount nung session sa wall climbing
100 = considered benta ng company
100 = fee sa trainor (hindi namin sya employee)
tama bang yung sa OR namin 100 lang vatable?
yung 100 na ibibigay sa trainor non vat?
I believe dapat 200 VATable sa OR nyo then 100 sa trainor ay expense. Require trainor to register and issue receipt for P100 para P100 nalang issue nyo.
hello po,
gusto ko lang po sana matuto on how to compute the 2550 m and 2550 q.ask ko din ung format na ilalagay sa books of accounts..ledger,journal,cash receipts journal,cash disbursement journal,subsidiary sales journal and subsidiary purchase journal.di ko pa kasi siya nagagawa until now.it would be a great help po..thanks in advance
Hi mhylez, we offer workshops teaching the things you mentioned. Its a two-day event on Basic Business Accounting and BIR Compliance. Accounting and actual BIR forms are used in the workshop based on the illustrative problem. Please click my name to reach the seminar programs. Thanks
Hello po,
Paano po ba ang computation pag manpower services. VAT registered po yung agency. For example: Php 7,000.00 ang reimbursable salaries and wages then less with Cash Advances of Php 600.00 with Php 210 agency fee. Do we deduct the advances then deduct the taxes or get the taxes before we deduct the advances? Or get only the taxes on the agency fee?
Thank you po.
Hi Libby, a manpower services is taxed based on gross receipts, except, security manpower that is taxed based on agency fees only.
Hi Sir Vic,
I’m so glad that there is a site like this to help everyone regarding Tax,Acctg. and Others matters critical to business. thank you so much for helping everyone.
I would like to ask if a VAT registered company can claim input tax for reimbursement of expenses incurred by the company’s officers and employees.
For example,a monthly cellphone billing amounting to P1,500 (inclusive of VAT)and the company only reimbursed P1,120 because the other P380 was used for non-business matters. can the company claim input tax for the P1,120?
thank you so much!
thank you so much!
Hi John. As a rule, input VAT to be claimed shall be supported by a sales invoice (goods) or official receipt (service) under the name of the claimant taxpayer. In the reimbursement mentioned, if the official receipt is under the name of your company, then, I believe you could to the extent of the business expense.