“Regular Output Vat”

Chapter 7
 What is Output VAT?
• Output VAT - the value added tax you
calculate and charge on your own sales of
goods and services if you are registered in
the VAT Registered.
 Sources of Regular Output
VAT
• Sale of Goods
• Sale of Services
• Sale of Properties
• Transactions Deemed Sales
 Sale of Goods

• The sale of is subject to 12% VAT based

on gross selling price in the month of
sale.
Products, service, or groups that will continue to
be VAT-exempt

• Food and agricultural • Renewable energy

products • Health
• Senior citizens • Enterprises and BPOs
• Persons with Disability located in Special
(PWD) Economic Zones
• Cooperatives • Condominium
• Tourism association dues
• Education • Rentals and leases
below P15,000 per
month
 Sample Problem:
• Mitsubishi, a Vat-registered car dealer sold
the following goods to a relative.

Selling Price PHP 600,000.00

Fair Market Value PHP 900,000.00

HOW MUCH IS THE OUTPUT VAT?

 SOLUTION:
Fair Market Value PHP 900,000.00
VAT Rate 12%
Output VAT PHP 108,000.00
• Why? Because of Unreasonably Lower
Selling Price.
 Problem:
• Mr. Yap, a vat-registered farm supply
dealer sold the following:
Fertilizers PHP 300,000.00
Corn Seeds PHP 200,000.00
Farm Equipment PHP 1,500,000.00
Pesticides PHP 200,000.00
TOTAL PHP 2,200,000.00
How much is the output vat?
 Solution:
Farm Equipment PHP 1,500,000.00
Pesticides PHP 200,000.00
TOTAL PHP 1,700,000.00
VAT Rate 12%
Output VAT PHP 204,000.00
• Why? Because it is considered as
agricultural product, if being taxed, the
burden will be shouldered by the
consumer.
 Sale of Services

• The sale of services is subject to 12% VAT

based on the gross receipts in the month
of collection.
 Sample Problem:
• Atty. De Vera, a VAT-registered lawyer
disclosed the following:

Total Profession fees billed PHP 700,000.00

Total Profession fees collected PHP 350,000.00
Advances by Certain Clients PHP 150,000.00
 Solution:
Total Profession fees billed PHP 700,000.00
VAT Rate 12%
Output Vat PHP 84,000.00
 Problem:
• Manang A, a restaurant which also caters
for special events had the following data
which may be relevant in filing its BIR
Form 2550M:
Gross Receipts from
Customers PHP 650,000.00
Gross Receipts from
Advanced Reservations PHP 60,000.00
Client Balances evidenced by
Promissory Note PHP 80,000.00
TOTAL PHP 790,000.00
 Solution:
Gross Receipts from
Customers PHP 650,000.00
Gross Receipts from
Advanced
Reservations PHP 60,000.00
TOTAL PHP 710,000.00
VAT Rate 12%
Output Vat PHP 85,200.00
Sales of goods and services to Senior Citizen
and PWD by Covered Establishment

• The law requires certain establishments

to provide discounts of not less than
20% to Senior Citizens and PWD.
Who may be considered as
Senior Citizen ?
1. Must be Filipino citizen who is a resident of
the Philippines.
2. Must be 60 yrs old or above
3. May apply to senior citizen with dual
citizenship provided that they prove their
Filipino citizenship and have at least 6
months residency in the Philippines
 List of 20% discount of services of Senior
Citizen

• Medical Services
• Transportation
• Hotels and Restaurants
• Funeral Services
• Recreation Centers
Person With Disability
 VAT EXEMPT
• The Bureau of Internal Revenue has issued the rules
implementing the tax perks to be enjoyed by persons
with disabilities, including their exemption from the
12% value-added tax.
• Under the guidelines, qualified PWDs can claim at
least 20% discount from hotels and lodging
establishments, restaurants, recreation centers,
theatres, cinema houses, concert hall as well as
medicines and gov’t and private hospitals.
 EXAMPLE OF OUTPUT TAX
Yuck Restaurant, a VAT taxpayer, recorded the
following receipts during the month:
• Receipts from senior citizen, P225,000
before 20% discount
• Reciepts from PWD, P 75,00
before 20% discount
• Receipts from regular P340,000
customers
• Total fees P640,000
 solution
• Receipts from senior citizen, P180,000
net of discount
• Reciepts from PWD, P60,000
net of discount
• Receipts from regular customers P340,000
• Total Vatable receipts P580,000
• Multilply by VAT rate 12%
• Output VAT P69,600
 Sale of Properties

Types of Sale of Properties Taxability

1. Sale by a dealer, developer or VATABLE

lessor of real properties

2. Sales of properties VATABLE

considered ordinary assets

3. Sale of properties not in the EXEMPT

course of business
 NIRC
• The fair value of real property, whichever is
higher between the zonal value and
assessed value
 TRAIN
• Sale of real properties not primarily held for sale to customers or for
lease in the ordinary course of trade or business; sale of real
property utilized for socialized housing as defined by Republic Act
No. 7279, otherwise known as the Urban Development and Housing
Act of 1992, and other related laws; residential lot valued at
Php1,500,000 and below; house and lot, and other residential
dwellings valued at Php2,500,000 and below: Provided that,
beginning January 1, 2021, the VAT exemption shall only apply
to sale of real properties not primarily held for sale to customers or
held for lease in the ordinary course of trade or business; sale of
real property utilized for socialized housing as defined by RA 7279,
sale of house and lot, and other residential dwellings with selling
price of not more than Php2 million: Provided, further, that every
three years thereafter, the amount herein stated shall be adjusted to
its present value using the Consumer Price Index as published by
the Philippine Statistics Authority (PSA);
 Sample Problem:
• Mr. San Pascual, a real property dealer
sold a commercial lot in February 2018.
the following relates:
Appraised Value P 4,500,000
Zonal Value 4,000,000
Assessed Value 2,500,000
Selling Price 3,800,000

• How much is the output VAT?

 Solution:
Zonal Value P 4,000,000
Multiply by 12%
Output VAT P 480,000
 Problem:
• SMDC, a VAT taxpayer, sold the following
properties:

Old Factory (BV @ P P 2,300,000

2,500,000)
Vacant Lot held as 4,000,000
investment
• How much is the output VAT?
 Solution:

Selling price of old P 2,300,000

factory
Multiply by 12%
Output VAT P 276,000
 Transaction Deemed Sales
• There is no actual sale. However, the
law deems that there is a taxable
sale.
List of Transactions Deemed Sales

• Transfer, use or consumption not in the course

of business of goods or properties originally
intended for sale or for use in the course of
business. Transfer of goods or properties not
in the course of business can take place when
VAT-registered person withdraws goods from
his business for his personal use;
• Distribution or transfer to:
– Shareholders or investors share in the profits of VAT-
registered person;
– Creditors in payment of debt or obligation.
List of Transactions Deemed Sales
• Consignment of goods if actual sale is not made
within 60 days following date such goods were
consigned.
• Retirement from or cessation of business with
respect to all goods on hand, whether capital
goods, stock-in-trade, supplies or materials as of
the date of such retirement or cessation,
whether or not the business is continued by the
new owner or successor.
 Sample Problem:
• Mr. Dela Cruz, transferred ownership
over a residential property which is held to
for sale to his daughter who is getting
married. The property had a cost basis of
P 3,000,000 and a fair market value of P
2,600,000 at the date of transfer. How
much is the output VAT?
 Solution:

Fair Market Value P 2,600,000

Multiply by 12%
Output VAT P 312,000
 Problem:
• Mr. Luna, a VAT registered taxpayer, ceases
business operation in January 2018. His
business properties upon termination of
business operation include:
Cash P 70,000
Accounts Receivable 150,000
Investments 190,000
Inventories 210,000
Property, plant and 900,000
equipment
Total Assets P 1,520,000
 Solution:

Inventories P 210,000
Property, plant and 900,000
equipment
Basis P 1,110,000
Multiply by 12%
Output VAT P 133,200
“THANK YOU  “

BY:
•Mon Mervin San Pascual
•Angelica Solante
•Samantha Tayone
•Joyce Vintayen
•Sun Me Yoo