Questions and Answers
What does input VAT refer to?
Which of the following is NOT a requisite for creditable input VAT?
How is transitional input VAT calculated?
What is required for a taxpayer to claim transitional input VAT?
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At what time can transitional input VAT be claimed?
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Which option is categorized under input VAT types?
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Which statement is true about regular input VAT?
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What happens if VAT is not separately billed on a sales document?
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Which vehicle is allowed for the use of an official or employee while qualifying for depreciation?
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What is the treatment of input VAT on construction in progress?
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For which type of vehicle is depreciation not allowed regardless of usage?
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What must be substantiated to allow for vehicle depreciation?
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When can the buyer claim input VAT on the purchase of real property in installments?
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What is the claimable input VAT for goods or properties deemed sold?
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Under what condition can land vehicles exceeding the value of P2,400,000 be depreciated?
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What happens if the taxpayer fails to substantiate the connection of the vehicle to their business?
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When is the input VAT on the purchase of goods or properties credited?
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How is the input VAT treated if the monthly aggregate acquisition cost of depreciable capital goods exceeds P1,000,000?
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What happens to the unamortized input VAT if depreciable capital goods are sold within 5 years?
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When can input VAT on capital goods be claimed outright since the implementation of the new law?
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What is the treatment for input VAT on purchase of non-depreciable vehicles?
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What triggers the amortization of deferred input VAT for depreciable capital goods?
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What is the maximum period over which deferred input VAT can be amortized?
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What is the presumptive input tax rate for qualified processors of sardines, mackerel, and milk?
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What change occurred with deferred input VAT under the TRAIN law effective January 1, 2022?
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What is the effective input VAT claim for sellers to government agencies due to the final withholding VAT?
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What percentage tax is withheld by the government on sales from non-VAT registered sellers?
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What does input VAT carry-over represent?
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Which month can the input VAT carry-over of the prior quarter be deducted?
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What is the rule regarding the input VAT carry-over in the second month of the quarter?
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What specific products qualify for the presumptive input VAT?
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What is the final withholding VAT rate applicable to sales to the government?
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Which of the following is excluded from input VAT carry-over?
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What is the rule for specific identification of input VAT?
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What happens to input VAT attributable to zero-rated claims that have been applied for a tax refund?
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Which category of input VAT is included in creditable input VAT when not applied for tax refund?
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What is the proportion of sales to government agencies contributing to the composition of creditable input VAT?
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Study Notes
Input VAT Overview
- Input VAT represents VAT incurred by VAT-registered individuals on goods, properties, or services, including leased properties.
- If VAT isn't billed separately, the selling price is considered inclusive of VAT.
Creditable Input VAT Requirements
- Must be paid or incurred in business related activities.
- Requires a valid VAT invoice or official receipt.
- The invoice/receipt must be issued by a VAT-registered entity.
- Input VAT must relate to taxable sales, not exempt sales.
Types of Input VAT
- Transitional Input VAT: 2% of VATable beginning inventory or actual VAT paid, whichever is higher, claimable on VAT registration.
- Regular Input VAT: 12% VAT paid on domestic purchases or imports. Recognized based on the timing of purchase or payment.
- Amortization of Deferred Input VAT: Applicable when acquisition cost exceeds P1,000,000; input VAT is amortized over the useful life or 60 months.
- Presumptive Input VAT: For specific processors (sardines, mackerel), a presumptive input tax of 4% on agricultural products used in production.
- Standard Input VAT: Sales to government agencies subject to a 5% final withholding VAT, allowing only 7% of sales as input VAT.
- Input VAT Carry-Over: Excess input VAT over output VAT in a period, leading to potential deductions in future months.
Transitional Input VAT
- Requires an inventory list and bookkeeping entry for recognition.
- Claimable in the month of VAT registration.
Regular Input VAT
- Claimable based on:
- Domestic purchases: Month of purchase.
- Services: Month paid.
- Importation: Month VAT paid.
- Depreciable capital goods: Amortized if aggregate cost exceeds P1,000,000.
Amortization Rules for Capital Goods
- Input VAT is claimable in the month of purchase for goods under P1,000,000.
- For amounts exceeding this, VAT amortized over the useful life or 60 months.
- If sold within 5 years, unamortized input tax can be claimed when sold.
Special Rules on Input Tax Credit
- Non-depreciable vehicles and construction projects treated as service purchases.
- Progress billings factor into input VAT credit.
Input VAT on Installment Purchases
- Input VAT is claimable on output VAT for each installment payment.
Input VAT Exclusions
- Advanced VAT applied for tax credits or zero-rated claims cannot carry over.
- Input VAT tied to expired zero-rated sales after 2 years is also excluded.
Rules on Input VAT Carry-Over
- Prior quarter carry-over deductible in first month of the current quarter.
- Specific deduction rules apply to each month within the quarter.
Claiming Input VAT
- Specific identification approach for traceable transactions.
- Pro-rata allocation for untraceable input VAT based on sales.
Composition of Creditable Input VAT
- Includes input VAT from regular and export sales, plus the 7% from sales to government agencies.
Depreciation Expense Rules for Vehicles
- Limitation to one vehicle per official, worth not exceeding P2,400,000.
- No depreciation allowed for yachts, helicopters unless used for transport in a transport business.
- Sufficient documentation required to prove direct business relation.
These notes encapsulate essential information on Input VAT, its types, requirements, and implications for businesses in the Philippines.
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Description
This quiz explores the concept of Input VAT, which is the value-added tax that a VAT-registered person pays on purchases and importations for business use. It covers the requisites for creditable input VAT and deals with scenarios where VAT may not be separately billed. Prepare to test your understanding of VAT regulations and implications.
