Transfer and business taxes by ampongan 6th sol man 15

EXERCISES 15-1 DISCUSSION QUESTIONS The introduction of value-added tax has simplified the business tax system in the Philippines because: a It has abolished various traditional business taxes and were replaced by one only; b It has eliminated more than 60 tax rates and replaced them by only two - 10% and 0% The scope of value-added tax are the following transactions: a Any sale, barter, or exchange of goods and properties, or similar transactions, in the course of trade or business; b Any sale of services, or similar transactions, in the course of trade or business; c Any lease of goods and properties, or similar transactions, in the course of trade or business; and d Any importation of goods, whether in the course of trade or business or not The value-added tax is payable by the seller and not by the purchaser of goods But being an indirect tax, it can be added to the cost of goods purchased, not as tax but as additional cost which the purchaser has to pay to obtain the goods purchased Hence, Mr Libre cannot invoke tax exemption privileges to avoid the passing or shifting of the VAT by the supplier of goods purchased by him (BIR Ruling No 91-151) On the assumption that neither of the two businesses are registered under the VAT system, then both of them are exempt from VAT because neither of them exceeds the threshold of an annual gross sales of P1,500,000 However, if anyone of them is VAT registered, then it shall be subject to VAT An unregistered VAT business shall be subject to VAT provided that the following requisites are satisfied: a That it is not granted exemption by the code or special law; and b The gross annual sales or receipts exceeds P1,500,000 No For purposes of the threshold of P1,500,000 the husband and the wife shall be considered as separate taxpayers However, the aggregation rule for Pepe shall apply Thus, the gross receipts from the practice of his profession and the revenue from business shall be combined for purposes of determining whether the threshold has been exceeded Considering that the aggregate gross receipts of Pepe does not exceed the P1.5 million threshold, he is not subject to VAT 61