VAT-exempt Transactions and Tax Credits (Sections 109-112, NIRC as amended)
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VAT-exempt Transactions and Tax Credits (Sections 109-112, NIRC as amended)

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@EnviableDobro

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Questions and Answers

What is the annual sales amount threshold for goods or services to be VAT-exempt?

  • P2,000,000.00
  • P3,000,000.00 (correct)
  • P4,000,000.00
  • P5,000,000.00

    • Which government agency is responsible for the post audit of exemptions claimed under the VAT provision?

  • Philippine Statistics Authority (PSA)
  • Bureau of Internal Revenue (correct)
  • Bureau of Customs
  • Department of Health (DOH)

    • What does 'input tax' refer to in the context of VAT regulations?

  • Consumer price index adjustment
  • VAT paid by a VAT-registered person (correct)
  • Tax credit available to buyers
  • Value-added tax due on sales

    • The term 'output tax' in VAT regulations relates to tax due on which transactions?

    <p>Value-added tax due on sales</p> Signup and view all the answers

    What should be adjusted using the consumer price index every three years?

    <p>Annual sales threshold</p> Signup and view all the answers

    For VAT-exempt sales, what are buyers not allowed in relation to tax?

    <p>Payment of input tax</p> Signup and view all the answers

    Which transactions are exempted from VAT according to the NIRC?

    <p>Sale of agricultural and marine food products in their original state</p> Signup and view all the answers

    In the context of VAT exemptions, what is considered 'in their original state'?

    <p>Even after simple processes like freezing or drying</p> Signup and view all the answers

    Which of the following is not exempted from VAT under the NIRC regulations?

    <p>Sale of luxury watches</p> Signup and view all the answers

    What is the consequence of having excess input VAT or output VAT?

    <p>The excess can be refunded by the government</p> Signup and view all the answers

    Which of the following processed food items is considered 'in their original state'?

    <p>Raw cane sugar and molasses</p> Signup and view all the answers

    What types of properties are generally exempted from VAT according to the NIRC?

    <p>Only agricultural and marine food products</p> Signup and view all the answers

    What percentage of the input VAT on the janitorial services can EFG Corporation claim?

    <p>50%</p> Signup and view all the answers

    When is input VAT on domestic purchase of goods creditable to the purchaser?

    <p>Upon consummation of the sale of goods or properties</p> Signup and view all the answers

    Under what conditions can input VAT on domestic purchases be claimed?

    <p>When the parties perform their respective undertakings under the contract of sale</p> Signup and view all the answers

    Which of the following is NOT a condition for consummation of a sale under the NIRC?

    <p>The invoice is issued</p> Signup and view all the answers

    In what scenarios can input VAT on domestic purchase of goods be creditable to the purchaser?

    <p>When buying materials intended for use in the course of business</p> Signup and view all the answers

    What must happen for a purchase of goods to be considered for conversion into or intended to form part of a finished product for sale?

    <p>The goods must be intended for resale as finished products</p> Signup and view all the answers

    Study Notes

    VAT-Exempt Transactions

    • Certain sales, barters, exchanges, or leases of properties are exempt from VAT, as specified in the NIRC.
    • Examples of VAT-exempt transactions include:
      • Sale or importation of agricultural and marine food products in their original state.
      • Sale or importation of livestock and poultry, or breeding stock and genetic materials.

    Input VAT and Output VAT

    • Input tax refers to the VAT paid by a VAT-registered person on importation of goods, local purchase of goods or services, or lease or use of property from a VAT-registered person.
    • Output tax refers to the VAT due on the sale or lease of taxable goods or properties or services by a VAT-registered person.
    • Excess input VAT can be credited to the VAT-registered person, while excess output VAT is payable to the BIR.

    Claiming Input VAT

    • Input VAT is creditable to the purchaser upon consummation of the sale of goods or properties.
    • Consummation occurs when the parties perform their respective undertakings under the contract of sale, culminating in its extinguishment.
    • Examples of purchases that can claim input VAT include:
      • Goods for sale.
      • Goods for conversion into or intended to form part of a finished product for sale, including packaging materials.
      • Goods for use as supplies in the course of business.
      • Goods for use as materials supplied in the sale of service.
      • Goods for use in trade or business.

    VAT Refund

    • The process of VAT refund is possible when there is excess input VAT.

    VAT-Registered Persons

    • VAT-registered persons can claim input VAT credits on their purchases.
    • VAT-registered persons are required to pay output VAT on their sales.

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    Description

    This quiz covers VAT-exempt transactions, input VAT and output VAT distinctions, consequences of excess input or output VAT, and the process of VAT refund as per Sections 109-112 of the NIRC. Test your knowledge on exemptions, credits, and refunds related to VAT.

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