TAX-501 - Lecture notes 221212 PDF

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCYCPA Review Batch 41  May 2021 CPA Licensure Examination  Week No. 5TAXATION A. Tamayo  G. Caiga  C. Lim  K. Manuel  E. Buen####### Page 1 of 4 0915-2303213  resacpareviewTAX- 501 : EXCISE TAXESA. Definition of excise tax Excise taxes apply to taxes on go...

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY CPA Review Batch 41  May 2021 CPA Licensure Examination  Week No. 5

TAXATION

A. Tamayo  G. Caiga  C. Lim  K. Manuel  E. Buen

TAX-501: EXCISE TAXES A. Definition of excise tax Excise taxes apply to taxes on goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition and to things imported as well as services performed in the Philippine, which tax shall be in addition to the value-added tax. B. Concept and nature of excise taxes 1. Considered These excise taxes may be considered taxes on production as they are collected only taxes on from the manufacturers and producers. production 2. An indirect tax Basically excise tax is an indirect tax, excise taxes are directly levied upon the manufacturer or importer upon removal of the taxable goods from its place of production or from the customs custody. These taxes, however, may be actually passed on to the end consumer as part of the transfer value or selling price of the goods sold, bartered or exchanged. C. Goods and services subject to excise tax Excise taxes apply to: 1. Goods subject a) goods manufactured or produced in the Philippines for domestic sales or to excise taxes consumption or for any other disposition, b) things imported, as well as c) services rendered in the Philippines Excise a) b) c) d) e) f) g)

2. Kinds of excise taxes

3. Examples of specific tax

4. Examples of ad valorem tax

5. Manner of Computation of Excise Tax

taxes specifically apply to: Alcohol products, Tobacco products, Petroleum products, Miscellaneous articles such as automobiles and non-essential goods, Non-essential services, Sweetened beverages, and Mineral products

The excise tax imposed herein shall be in addition to the value-added tax imposed. 'Specific tax' - an excise tax imposed and based on weight or volume capacity or any other physical unit of measurement. 'Ad valorem tax - an excise tax imposed and based on selling price or other specified value of the good.' a) Excise tax on Cigarettes Packed by Hand b) Excise tax on Cigarettes Packed by Machine c) Excise tax on petroleum products d) Excise tax on mineral products e) Excise tax on sweetened beverages a) Excise tax on alcoholic products b) Excise tax on cigars c) Excise tax on automobiles d) Excise tax on non-essential services a) Specific tax = Units x Specific tax rate b) Ad valorem tax = Units x SP/unit x Ad valorem tax rate

D. Filing of Return and Payment of Excise Tax on Domestic Products. 1. Persons Liable to File a Return, Filing of Return on Removal and Payment of Tax. Every person liable to pay excise tax shall file a separate return for each place of a. Persons Liable to File production setting forth, among others: a) the description and quantity or volume of products to be removed, a Return b) the applicable tax base and the amount of tax due thereon. In the case of indigenous petroleum, natural gas or liquefied natural gas, the excise tax shall be paid by the first buyer, purchaser or transferee for local sale, barter or transfer. Excise tax on exported products shall be paid by the owner, lessee, concessionaire or operator of the mining claim. Should domestic products be removed from the place of production without the payment of the tax, the owner or person having possession thereof shall be liable for the tax due thereon.

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ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY

TAX-501

Week No. 5: EXCISE TAX b. Time for Filing of Return and Payment of the Tax

Unless otherwise specifically allowed, the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production. Excise tax on locally manufactured petroleum products and indigenous petroleum levied under Sections 148 (Manufactured Oil and Other Fuels) and 151(A)(4) (Indigenous Petroleum), respectively, shall be paid: a) within ten (10) days from the date of removal of such products for the period from January 1, 1998 to June 30, 1998; b) within five (5) days from the date of removal of such products for the period from July 1, 1998 to December 31, 1998; and, c) before removal from the place of production of such products from January 1, 1999 and thereafter. Excise tax on nonmetallic mineral or mineral products, or quarry resources shall be due and payable upon removal of such products from the locality where mined or extracted. With respect to the excise tax on locally produced or extracted metallic mineral or mineral products, the person liable shall file a return and pay the tax within fifteen (15) days after the end of the calendar quarter when such products were removed subject to such conditions as may be prescribed by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. For this purpose, the taxpayer shall file a bond in an amount which approximates the amount of excise tax due on the removals for the said quarter.

c. Place of Filing of Return and Payment of the Tax d. Exceptions

The foregoing rules notwithstanding, for imported mineral or mineral products, whether metallic or nonmetallic, the excise tax due thereon shall be paid before their removal from customs custody. Except as the Commissioner otherwise permits, the return shall be filed with and the tax paid to any authorized agent bank or Revenue Collection Officer, or duly authorized City or Municipal Treasurer in the Philippines.

The Secretary of Finance, upon recommendation of the Commissioner may, by rules and regulations, prescribe: (a) The time for filing the return at intervals other than the time prescribed in the preceding paragraphs for a particular class or classes of taxpayers after considering factors such as volume of removals, adequate measures of security and such other relevant information required to be submitted under the pertinent provisions of this Code; and (b) The manner and time of payment of excise taxes other than as herein prescribed, under a tax prepayment, advance deposit or similar schemes. In the case of locally produced of extracted minerals and mineral products or quarry resources where the mine site or place of extraction is not the same as the place of processing or production, the return shall be filed with and the tax paid to the Revenue District Office having jurisdiction over the locality where the same are mined, extracted or quarried: Provided, however, That for metallic minerals processed abroad, the return shall be filed and the tax due thereon paid to the Revenue District Office having jurisdiction over the locality where the same are mined, extracted or quarried.

2. Determination of Gross Selling Price of Goods Subject to Ad Valorem Tax a. Price excluding Unless otherwise provided, the price, excluding the value-added tax, at which the VAT goods are sold at wholesale in the place of production or through their sales agents to the public shall constitute the gross selling price b. Manufacturer If the manufacturer also sells or allows such goods to be sold at wholesale in also sells or another establishment of which he is the owner or in the profits of which he ha s an allows goods to interest, the wholesale price in such establishment shall constitute the gross selling be sold at price. wholesale in another establishment he owns Should such price be less than the cost of manufacture plus expenses incurred until c. Should price be the goods are finally sold, then a proportionate margin of profit, not less than ten less than the percent (10%) of such manufacturing cost and expenses, shall be added to cost of constitute the gross selling price. manufacture

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