TAX304 VAT Compliance - Lecture notes 12 PDF

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCYCPA Review Batch 41  May 2021 CPA Licensure Examination  Weeks No. 3-TAXATION A. Tamayo  G. Caiga  C. Lim  K. Manuel  E. BuenPage 1 of 4 0915-2303213  resacpareviewTAX-304: VAT COMPLIANCE REQUIREMENTS1. Invoicing Requirement, Refund of Input Taxes and Ot...

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ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY CPA Review Batch 41  May 2021 CPA Licensure Examination  Weeks No. 3-4

TAXATION

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

TAX-304: VAT COMPLIANCE REQUIREMENTS 1. Invoicing Requirement, Refund of Input Taxes and Others a. VAT Invoice and VAT Official Receipt b. Validity of VAT invoice and VAT OR c. Invoicing Requirement

A VAT-registered person shall issue: a) a VAT invoice for every sale, barter, or exchange of goods or properties; a nd b) a VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. The invoice/receipt shall be valid for five (5) years from the date of the permit to use. The following information shall be indicated in VAT invoice or VAT official receipt: a) A statement that the seller is VAT-registered person followed by TIN; b) The total amount to be paid with the indication that such amount includes the VAT: 1) Amount of tax shall be shown as a separate item in the invoice or receipt; 2) “VAT-exempt sale”, if the sale is exempt; 3) “Zero-rated sale”, if the sale is subject to zero percent VAT; 4) If mixed sales, breakdown of the sales price between its taxable, exempt and zero-rated components and the calculation of the VAT on each portion. Separate invoices or receipts may be issued for each type of sales. c) The name, business style, if any, address and TIN of the customer, in case the sales amount to P1,000 or more.

Exercise: Indicate what invoice or official receipt shall be issued by the following assuming VAT threshold amount is exceeded 1) Office supplies trader 2) Warehousing services 3) Beauty parlor 4) Mango farm owner 5) Trucking business 6) Fuel or power supplier generated from renewable sources of energy 7) Movie theatre owner 8) Professional basketball player in the Philippine Basketball Association (PBA) 9) Contract artists of television companies 10) Fresh fish dealer 2. Invoicing and Recording Deemed Sale Transactions Deemed Transaction a. Transfer, use or consumption not in the course of trade or business; b. Distribution or transfer to shareholders or investors or to creditor in payment of debt or obligation; c. Consignment of goods if not sold within 60 days following the date of consignment; d. Retirement from or cessation of business

Invoicing and Recording Memorandum entry

Invoice shall be prepared at the time of the occurrence of the transaction and shall be duly recorded in the subsidiary sales journal. The total amount of “deemed sale” shall be included in the return to be filed for the month or quarter. Same as in 2) above

An inventory shall be prepared and submitted to the RDO having jurisdiction over the taxpayer’s principal place of business not later than 30 days after retirement or cessation from business.

3. VAT Returns and Payment of Value-Added Tax a. Monthly VAT Declaration and Payment of VAT Not later than 20th day following the end of the first two (2) months in a 1) Filing of the declaration quarter and payment of valueadded tax 2) Taxpayers enrolled with Group A – 25 days following the end of the month Electronic Filing and B – 24 days following the end of the month Payment System (EFPS) C – 23 days following the end of the month D – 22 days following the end of the month E – 21 days following the end of the month

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0915-2303213  www.resacpareview.com

TAX-304

ReSA – THE REVIEW SCHOOL OF ACCOUNTANCY Weeks 3-4: VAT COMPLIANCE REQUIREMENTS

b. Filing of Quarterly VAT Return and Payment of VAT 1) Filing of quarterly return Every person liable to pay the value-added tax imposed under this Title shall and payment of valuefile a quarterly return of the amount of his gross sales or receipts within added tax twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer. VAT-registered persons shall pay the value-added tax on a monthly basis. Monthly VAT declarations shall remain until December 31, 2022.

2) Meaning of taxable quarter 3) Quarterly return includes the amounts reflected in the monthly VAT declarations 4) Monthly payments to be credited in the quarterly VAT return 5) Deductions from the quarterly VAT payable (excess input tax)

Beginning January 1, 2023, the filing and payment required shall be done within twenty-five (25) days following the close of the taxable year. The term “taxable quarter” shall mean the quarter that is synchronized to the income tax quarter of the taxpayer (i.e. calendar quarter or fiscal quarter.) Amounts reflected in the monthly VAT declarations for the first two (2) months of the quarter shall still be included in the quarterly VAT return, which reflects the cumulative figures for the taxable quarter. Payments in the monthly VAT declarations shall be credited in the quarterly VAT return to arrive at the net VAT payable, or excess input tax/overpayment as of the end of the quarter. The VAT payable/Excess Input tax for each taxable quarter shall be reduced by the total amount of taxes previously paid for the immediately preceding two (2) months, and the advance payments/creditable VAT withheld by the payors for the three months of the quarter.

c. Exercise: The following data for the current year are presented to you: Output tax P100,000 120,000 80,000 150,000 90,000 110,000

January February March April May June

Input tax P 80,000 110,000 120,000 100,000 50,000 60,000

Compute the VAT payable on the monthly declarations and quarterly return d. Substituted VAT Return 1) Substituted VAT 1) In case of sale of goods or services by persons subject to 12% VAT, whose gross Return (Payee with sales or receipts have already been subjected to 12% VAT by the lone payor, the Lone Payor) payee (seller) shall no longer be required to file the monthly VAT declaration and the quarterly returns. 2) The Monthly Remittance Return of VAT Withheld duly filed by the withholding agent-payor serves as the substituted return of the payee (seller) with lone payor. 2) Payee with Several Payees with several payors are still required to file the regular VAT return reflecting Payors the consolidated total of all taxable transactions for the taxable period and applying as tax credits the taxes withheld by several payors. e. Substituted Official Receipts Sellers who are Sellers of services whose gross receipts have been subjected to 12% final VAT shall exempt from issuing be exempt from the obligation of issuing duly registered VAT official receipts Official Receipts covering their receipts for services sold. f. Short Period Return 1) Final return of a person who retires from business

2) Subsequent monthly declarations/ quarterly returns to be filed after retirement 3) Effective date of VAT registration 4) Initial monthly VAT declaration or quarterly VAT return

Any person who retires from business with due notice to the BIR office where the taxpayer (head office) is registered and whose VAT registration has been cancelled shall file a final quarterly return and pay the tax due thereon within twenty-five (25) days from the end of the month when the business ceases to operate or when the VAT registration has been officially cancelled. Subsequent monthly declarations/quarterly returns are still required to be filed if the results of the winding up of the affairs/business of the taxpayer reveal taxable transactions.

All persons first registered shall be liable to VAT on the effective date of registration stated in their Certificates of Registration (i.e., the first day of the month following their registration.) 1) If the effective date of registration falls on the first or second month of the taxable quarter, the initial monthly VAT declaration shall be filed within twenty (20) days after the end of the month, and the initial quarterly return shall be filed on or before the 25 th day after the end of the taxable quarter.

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