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What is the primary characteristic of Value Added Tax (VAT) that distinguishes it from other types of taxes?
What is the purpose of the Tax Credit Method in VAT?
What is the term for the VAT due or paid on the taxable sale, barter, or exchange of goods, properties, or services by a seller or transferor?
How is the VAT rate applied in the Philippines?
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What is the formula to compute the VAT?
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What is the principle that determines the taxation or exemption from tax in VAT?
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What is the VAT rate imposed on export sales of goods in the Philippines?
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What distinguishes the Input Tax from the Output Tax?
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What are the three essential conditions that must be satisfied for a transaction to be subject to VAT?
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What is the tax base of VAT on sale of properties?
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What is meant by the phrase 'in the course of his trade or business'?
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Who are persons liable to VAT?
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What is the VAT rate on sale of goods or properties?
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What is the VAT threshold?
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What is the situs (place of taxation) of VAT?
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Is the sale of a property used in a business subject to VAT?
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Are services rendered in the Philippines by non-resident foreign persons subject to VAT?
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Is the importation of goods subject to VAT?
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If a real estate dealer sells a property with a selling price of Php1,560,000.00, how much is the VAT exclusive price?
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What is a condition for the taxability of real properties under VAT?
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What is an example of a transaction deemed as a sale subject to VAT?
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What is the basis for the output tax when a real estate dealer retires from or ceases business with respect to inventories on hand?
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What is not a requisite for the taxability of real properties under VAT?
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What happens when a real estate dealer transfers a property not in the course of business?
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What is the effect of the absence of any of the requisites for the taxability of real properties under VAT?
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What is the significance of the principal office of the business in the context of VAT?
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Study Notes
Value Added Tax (VAT)
- VAT is a tax on consumption levied on the sale, barter, exchange, or lease of goods, properties, and services in the Philippines and on the importation of goods.
Characteristics of VAT
- Indirect tax
- Tax on value added of a taxpayer
- Transparent form of sales tax, with the amount of tax shown as a separate item in the VAT invoice or receipt
- Collected through the tax credit method
- Adopts the "tax inclusive method"
- Follows the destination principle (taxation or exemption from tax depends on the destination of the goods)
Computation of VAT
- Total amount ÷ 1.12 x 12% = VAT
Elements of a VATable Transaction
- There must be a sale, barter, exchange, or lease (SBEL) in the Philippines
- The SBEL must be of taxable goods, properties, or services
- The SBEL must be made by a taxable person in the course of his trade or business or furtherance of his profession
VAT Threshold
- Annual gross sales and/or receipts of more than Php3,000,000.00
Persons Liable for VAT
- Any person who, in the course of his trade or business, sells, barters, exchanges, leases goods or properties, or renders services
- Any person who imports goods
Meaning of "In the Course of His Trade or Business"
- Regular conduct or pursuit of a commercial or economic activity
- Includes transactions incidental to the main purpose
VAT on Sale of Properties
- Properties subject to VAT:
- Real properties held primarily for sale to customers or held for lease in the ordinary course of trade or business
- Tax base of VAT on sale of properties: 12% of the gross selling price or gross value in money of the goods or properties sold
Scenario: VAT Computation on Sale of Properties
- Selling price: Php13,000,000.00
- Computation: Php13,000,000.00 ÷ 1.12 x 12% = Php1,560,000.00 (if selling price is exclusive of VAT)
Situs of VAT
- Place where the principal office of the business is located
Requisites for Taxability (VAT) of Real Properties
- Seller executes a deed of sale, including dacion en pago, barter, or exchange, assignment, transfer, or conveyance or merely contract to sell involving real property
- Real property is located within the Philippines
- Seller or transferor is engaged in the real estate business
- Real property is held primarily for sale or for lease in the ordinary course of his trade or business
- Sale is not exempt from VAT under any law
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Description
This quiz covers the basics of Value Added Tax (VAT) in the Philippines, including its characteristics and application.