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Questions and Answers
What are the two main business taxes in the Philippines?
What are the two main business taxes in the Philippines?
Which of the following transactions is NOT specifically listed as VAT-exempt under the tax code?
Which of the following transactions is NOT specifically listed as VAT-exempt under the tax code?
What is the key factor in determining the applicable business tax for a transaction?
What is the key factor in determining the applicable business tax for a transaction?
What is the tax basis for both the value added tax (VAT) and the other percentage tax (OPT)?
What is the tax basis for both the value added tax (VAT) and the other percentage tax (OPT)?
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Which of the following is NOT a classification of business transactions mentioned in the text?
Which of the following is NOT a classification of business transactions mentioned in the text?
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What is the key difficulty in determining the applicable business tax for a transaction?
What is the key difficulty in determining the applicable business tax for a transaction?
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If a business transaction is listed as VAT exempt, what tax is it subject to?
If a business transaction is listed as VAT exempt, what tax is it subject to?
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If a transaction is listed as subject to OPT, what does this mean?
If a transaction is listed as subject to OPT, what does this mean?
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For a VAT-registered taxpayer, which transactions are subject to VAT?
For a VAT-registered taxpayer, which transactions are subject to VAT?
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What is the condition for VATable transactions to be subject to VAT for a non VAT-registered taxpayer?
What is the condition for VATable transactions to be subject to VAT for a non VAT-registered taxpayer?
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What is the standard VAT rate applied to most transactions subject to VAT?
What is the standard VAT rate applied to most transactions subject to VAT?
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How are sales to the government taxed under the VAT system?
How are sales to the government taxed under the VAT system?
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Study Notes
Business Taxes
- There are two main business taxes: Value Added Tax (VAT) and Other Percentage Tax (OPT).
- Both taxes impose a fixed rate, but the rate depends on the type of transaction.
- The tax basis is the gross selling price or gross receipts.
Classifications of Business Taxes
- Specifically listed VAT-Exempt transactions (Sec 109(A) to Sec 109(BB) NIRC)
- Specifically listed transactions subject to OPT (Sec 117 to Sec 127 NIRC)
- Transactions subject to 3% OPT for not reaching the 3,000,000 threshold (Sec 109(CC) NIRC)
- VAT transactions in general (Sec 106 to Sec 108, excluding zero-rated VAT below)
- Zero-rated VAT transactions (Sec 106(A)(2) and Sec 108(B) NIRC, other special laws)
- VAT Sales to Government (Sec 114(C))
Determining the Applicable Tax
- Determination of applicable tax is on a transaction-by-transaction basis.
- A business may have some transactions subject to VAT, some subject to OPT, and some that are VAT exempt.
- If a transaction is VAT exempt, it is never subject to either OPT or VAT (except in certain conditions).
- If a transaction is listed as subject to OPT, the particular rate applicable to that transaction is used.
- If the taxpayer is VAT-registered, transactions (other than VAT-exempt or specifically listed as OPT) are subject to VAT.
- If the taxpayer is not VAT-registered, and the transactions are not VAT-exempt or specifically listed as OPT, the transaction is subject to a 1% OPT (or 3% after a certain period).
Nature of OPT
- A percentage tax is a tax imposed by a certain percentage on the tax basis.
- In the case of Other Percentage Taxes, it is imposed on the gross selling price or on the gross receipts.
- Unlike VAT, there is no need for any added value to the product or service.
OPT Transactions
- Transactions specifically listed as being subject to OPT under Sec 117 to Sec 127 NIRC.
- Each transaction listed has a separate rate to be used.
- Examples include domestic carriers, keepers of garages, and international carriers transporting cargo to another country.
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Description
Test your knowledge on Business Taxes with a focus on Value Added Tax (VAT) and Other Percentage Tax (OPT). This quiz covers transactions, tax rates, and tax basis related to business taxation.
