EXERCISES 17-1 No The discounts are not excludible from the gross selling price because they are granted only upon the subsequent happening of an event or fulfillment of certain conditions, such as prompt payment or attainment of sales goals by its customers (VAT Ruling 204-90, Oct 16, 1990) I will inform Josefa Alvarado that Revenue Memorandum Circular No 8-99, dated January 20, 1999, requires that output tax on the sale of goods, properties and services must not be indicated separately in the sales invoice or official receipt However, this memorandum circular has already been repealed by Revenue Regulation 16-2006 which requires that all output taxes must be billed separately in the invoice Thus, the information gathered by her is already obsolete The taking of the goods from the grocery is a case of consumption not in the course of business of goods originally intended for sale in the course of business which is a deemed sale transaction Therefore the amount corresponding to the goods taken are subject to output tax The sale by First Unibrand Food Corporation (FUFC) is a sale not in the course of business of all the properties which are originally intended for use in the course of business Therefore, it is a deemed sale transaction which is subject to VAT Such being the case, the sale by FUFC of all its machineries to its parent company, NIKON, is subject to 12% VAT (BIR Ruling 057-99) No, the house and lot is not held primarily to customers or held for lease in the ordinary course of trade or business of Gabby Moreover, the unit in the subdivision is intended for low-cost housing under RA 7279 Yes, the transaction between Isuki Company and Lyco Corporation is a case of a foreign currency denominated sale because the sale is made to a nonresident to which the goods are to be delivered to a resident of the Philippines and to be paid in acceptable foreign currency in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas EXERCISES 17-2 The discount should be based on the gross selling price The prompt payment discount is not deductible from the selling price for purposes of computing valueadded tax because the granting of which depend upon the happening of a future event Thus, the amount to be paid by Paloma to Papsi Cokla Company is computed as follows: Price per case Less: Discount (2% x P100) Net amount Add: VAT (100 x 12%) Payable per case x Number of cases purchased Actual amount payable to supplier P 100 98 12 110 10 P1,100 Cash sales P 1,760,000 65 Sales on account Total Less: Sales returns and allowances Sales discounts Taxable base Multiply by Output tax Less: Input tax VAT payable 513,000 2,273,000 P 16,500 16,500 33,000 2,240,000 3/28 240,000 230,000 10,000 a The seller and the buyer are subject to VAT Sales book of Advance Company Cash Output tax (13,440 X 3/28) Sales Purchase Enterprises book of P 13,440 P 1,440 12,000 Bestbooks Purchases Input tax Cash 12,000 1,440 13,440 b Seller is VAT-registered while buyer is not Sales book of Advance Company Cash Output tax Sales 13,440 1,440 12,000 Purchase book of Bestbooks Enterprises Purchases Cash 13,440 13,440 c Buyer is VAT-registered while the seller is not Purchase book of Bestbooks Enterprises Purchases Cash 13,440 13,440 Sales books of Advance Company Cash Sales 13,440 13,440 A JANUARY Input tax Inventory (660,000 x 2%= 13,200) vs 40,000 P 13,200 Purchases 500,000 66 13,200 Input tax Cash 60,000 560,000.0 Cash Output tax (1,344,000 X 3/28) Sales 1,344,000 144,000 1,200,000 Output tax Input tax (13,200 + 60,000) VAT payable 144,000 73,200 70,800 B FEBRUARY VAT payable Cash 70,800 70,800 Purchases Cash 550,000 550,000 Equipments Input tax (50,000 x 12%) Cash 50,000 6,000 56,000 Cash Output tax Sales 336,000 36,000 300,000 Cash Input tax Purchase returns 23,520 Sales returns Output tax Cash 33,000 3,960 Output tax (36,000 – 3,960) Input tax (6,000 – 2,520) VAT payable 32,040 2,520 21,000 36,960 3,480 28,560 a VAT Business Purchases Cash 50,000 50,000 Non-VAT Business Purchases Cash 20,000 20,000 b VAT Business Purchases Input tax (89,600 x 3/28) Cash Non-VAT Business Purchases 80,000 9,600 89,600 22,736 67 Cash 22,736 c Supplies Input tax (34,944 x 3/28) Cash 32,200 3,744 34,944 Equipment Input tax Cash 32,200 3,864 36,064 d VAT Business (exclusive of tax) Cash Output tax Sales 448,000 48,000 400,000 Non-VAT Business Cash Sales 100,000 100,000 e Sales – VAT Business Sales – Non-VAT Business Total sales P 400,000 100,000 500,000 Supplies [3,744 - (4/5 x 3,744)] Equipment [3,864 – (4/5 x 3,864] Input tax 748.80 772.80 1,521.60 f Output tax Input tax 48,000.00 15,686.4 32,313.6 VAT payable Sales (594,000 x 3/28) P 63,642.86 1,414.29 Less: Sales returns (13,200 x 3/28) Deemed sales: Payment to creditors ) Consignment sales Out on consignment Goodwill to employees Total Multiply by 27,500 34,100 68,750 11,000 141,350 3/28 Output tax Less: Input tax (253,000 x 3/28) VAT payable 62,228.5 Domestic sales (1,452,000 x 3/28) Export sales (1,815,000 x 0%) Output tax 15,144.6 77,373.2 27,107 14 50,266 07 155,571.43 155,571.43 68 Less: Input tax Purchases – export (422,000 x 3/28) 45,214.2 66,235 71 27,225.0 138,674.9 16,896.4 Purchases – domestic (618,200 x 3/28) Purchases – supplies (254,100 x 3/28) VAT payable Actual VAT paid P 365,000 Two percent (2%) of inventory: Goods for resale P1,350,00 1,562,00 616,00 429,00 3,957,00 % Goods manufactured Goods in process of production Goods purchased for processing Total Multiply by 79,140 Transitional input tax (higher) 365,00 Total purchases of sugar cane P1,000,00 Portion produced into refined sugar: White sugar Bagasse Purchases bagasse Rate produced into refined 60% 5% sugar & Presumptive input tax Output tax (2,000,000 x 12%) Less: Input tax On purchases Presumptive input tax VAT payable 65 % 650,0 00 % 26,00 240,000 35,000 26,000 61,000 179,000 Notes: Raw sugars are not subject to presumptive input taxes because they are exempt from value-added tax Bagasse is subject to presumptive input tax because it is not included in the exemption from VAT under Revenue Regulation 16-2005 10 Output tax (P1,100,000 x 3/28) 117,857.1 69 Less: Input tax Purchases, VAT (440,000 x 3/28) 47,142.86 Purchases, VAT & Non-VAT (9,900 x 3/28) 1,060.71 Allocation based on sales: Sales, VAT P 1,000,000 Sales, Non-VAT 500,000 Total 1,500,000 (1,000,000/1,500,000 x 1,060.71) 707.14 46,435.7 71,421 42 VAT payable 11 Output tax - sale of school supplies (400,000 x 12%) P48,000.0 Less: Allocated Input tax Input tax on computer (44,000 x 3/28) P 4,714.29 Taxable sales 400,000 Exempt sales 600,000 Total 1,000,000 (4,714.29 x 400/1,000 ) 1,885.7 VAT payable 46,114.2 12 January Output tax Less: Input taxes On purchases On machinery (2,000,000 x 12%) / 60 VAT payable February Output tax Less: Input taxes On purchases On machinery (2,000,000 x 12%) / 60 VAT payable 13 Output tax (700,000 x 12%) Less: Input taxes Purchases (500,000 x 12%) Machinery (1,500,000 x12%)/60 x Unutilized input tax Excess input tax Output tax (1,500,000 x 12%) Less: Input taxes Purchases (200,000 x 12%) Excess tax carry over Machinery (3,000 x 3) VAT payable 14 60,000 30,000 4,000 34,000 26,000 65,420 38,730 4,000 42,730 22,690 84,000 60,000 6,000 40,000 106,000 (22,000) 180,000 24,000 22,000 9,000 Supplier of goods: 70 55,000 125,000 Selling price Less: Output tax (1,000 x 12%) Invoice amount Less: 5% withholding of final VAT (1,000 x 5%) 1% withholding of income tax (1,000 x 1%) Amount payable to supplier of goods Supplier of services: Selling price Less: Output tax (5,000 x 12%) Invoice amount Less: 5% withholding of final VAT (5,000 x 5%) 2% withholding of income tax (1,000 x 2%) Amount payable to supplier of goods 15 Actual collection (exclusive of the VAT) Agreed consideration (exclusive of the VAT) 10,000 1,000,000 X 1,500,000 x 12% = 1,800 71 1,000 120 1,120 50 10 60 1,060 5,000 600 5,600 250 100 X Zonal value 350 5,250 x 12 % ... 36,960 3,480 28,560 a VAT Business Purchases Cash 50,000 50,000 Non-VAT Business Purchases Cash 20,000 20,000 b VAT Business Purchases Input tax (89,600 x 3/28) Cash Non-VAT Business Purchases 80,000... 3,864 36,064 d VAT Business (exclusive of tax) Cash Output tax Sales 448,000 48,000 400,000 Non-VAT Business Cash Sales 100,000 100,000 e Sales – VAT Business Sales – Non-VAT Business Total sales... returns and allowances Sales discounts Taxable base Multiply by Output tax Less: Input tax VAT payable 513,000 2,273,000 P 16,500 16,500 33,000 2,240,000 3/28 240,000 230,000 10,000 a The seller and