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Questions and Answers
According to the provided text, who is liable for value-added tax (VAT)?
According to the provided text, who is liable for value-added tax (VAT)?
- Only corporations that render services.
- Any person who, in the course of trade or business, sells, barters, exchanges, or leases goods or properties, renders services, including digital services, and any person who imports goods. (correct)
- Only those who import goods for personal use.
- Only individuals who sell goods.
Value-added tax (VAT) is a direct tax that cannot be passed on to the buyer.
Value-added tax (VAT) is a direct tax that cannot be passed on to the buyer.
False (B)
What does 'in the course of trade or business' mean, as defined in the context of VAT liability?
What does 'in the course of trade or business' mean, as defined in the context of VAT liability?
the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a nonstock, nonprofit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity
The rule of __________, to the contrary notwithstanding, services rendered in the Philippines by nonresident foreign persons shall be considered as being rendered in the course of trade or business.
The rule of __________, to the contrary notwithstanding, services rendered in the Philippines by nonresident foreign persons shall be considered as being rendered in the course of trade or business.
How are digital services delivered by nonresident digital service providers treated for VAT purposes, according to the text?
How are digital services delivered by nonresident digital service providers treated for VAT purposes, according to the text?
Non-profit organizations are always exempt from value-added tax (VAT), regardless of their activities.
Non-profit organizations are always exempt from value-added tax (VAT), regardless of their activities.
What happens to existing contracts of sale or lease of goods, properties, or services when Republic Act No. 7716 takes effect?
What happens to existing contracts of sale or lease of goods, properties, or services when Republic Act No. 7716 takes effect?
Can the amount of value-added tax be shifted or passed on?
Can the amount of value-added tax be shifted or passed on?
Any person who __________ goods shall be subject to value-added tax.
Any person who __________ goods shall be subject to value-added tax.
What is the significance of Republic Act No. 7716, as mentioned in the text?
What is the significance of Republic Act No. 7716, as mentioned in the text?
If a non-resident digital service provider's services are consumed outside of the Philippines, they are still subject to VAT in the Philippines.
If a non-resident digital service provider's services are consumed outside of the Philippines, they are still subject to VAT in the Philippines.
Give an example of a transaction that would be considered 'in the course of trade or business' according to the provided text.
Give an example of a transaction that would be considered 'in the course of trade or business' according to the provided text.
Value-added tax is a(n) __________ tax.
Value-added tax is a(n) __________ tax.
Which entities are specifically mentioned as being included in the definition of 'in the course of trade or business'?
Which entities are specifically mentioned as being included in the definition of 'in the course of trade or business'?
Match the following terms with their descriptions:
Match the following terms with their descriptions:
The definition of 'in the course of trade or business' only applies to for-profit organizations.
The definition of 'in the course of trade or business' only applies to for-profit organizations.
What condition must be met for digital services provided by a non-resident to be taxable in the Philippines?
What condition must be met for digital services provided by a non-resident to be taxable in the Philippines?
Any person who, in the course of trade or business, sells, barters, exchanges, or __________ goods or properties shall be subject to VAT.
Any person who, in the course of trade or business, sells, barters, exchanges, or __________ goods or properties shall be subject to VAT.
Why is VAT considered an 'indirect tax'?
Why is VAT considered an 'indirect tax'?
Regardless of consumption location, digital services rendered by non-resident foreign persons are always subject to VAT in the Philippines.
Regardless of consumption location, digital services rendered by non-resident foreign persons are always subject to VAT in the Philippines.
Flashcards
Who is liable for VAT?
Who is liable for VAT?
Any individual or entity that sells, barters, exchanges, or leases goods or properties, renders services (including digital services), or imports goods in the course of trade or business is subject to value-added tax.
What is an indirect tax?
What is an indirect tax?
VAT is an indirect tax, meaning the tax burden can be transferred from the seller to the buyer, transferee, or lessee of goods, properties, or services.
Course of trade or business
Course of trade or business
The 'course of trade or business' refers to the regular conduct of commercial or economic activities, including incidental transactions, by any person, whether a non-profit, private organization, or government entity.
Services by nonresident foreign persons
Services by nonresident foreign persons
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Digital services in the Philippines
Digital services in the Philippines
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Study Notes
- Any person who sells, barters, exchanges, or leases goods or properties in the course of trade or business is liable for value-added tax (VAT).
- This also applies to those who render services, including digital services, and those who import goods.
- VAT is an indirect tax.
- The tax amount can be transferred or passed on to the buyer, transferee, or lessee of the goods, properties, or services.
- This rule applies to existing contracts of sale or lease when Republic Act No. 7716 took effect.
- "In the course of trade or business" refers to the regular conduct of a commercial or economic activity, including incidental transactions.
- This applies to any person, whether or not they are a nonstock, nonprofit private organization or a government entity.
- The disposition of net income or exclusivity of sales to members or their guests is irrelevant.
- Services rendered in the Philippines by nonresident foreign persons are considered as being rendered in the course of trade or business, despite the rule of regularity.
- Digital services delivered by nonresident digital service providers are considered performed or rendered in the Philippines if consumed there.
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