JULY 19, 2016 TUESDAY

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1. Enumerate the vat exempt transactions

2. What are the characteristics of taxable business transactions?
1. Regular transactions
2. Incidental transactions
3. Transactions for profit or for not-for-profit
4. Transactions consummated within the philippines
5. Lawful transactions
3. What is VAT?
ANS: Valencia pg. 331 6th Edition
4. When can we deduct the input tax from output tax?
5. What is input VAT?
6. When can a taxpayer's registration for VAT business become compulsory?
7. Discuss the VAT thresholds
8. What is meant by the term "vatable"?
Vatable means that vatable sales are subject to VAT if the tax payer is
a. Vat registered
b. Vat registrable
The term vatable does not mean that sales is automatically subject to vat
9. What is Indirect Tax?
The tax is imposed to the seller rather than to the buyer.
10. Are gross receipts of hospital vat exempt?
11. How is Vat payable computed?
12. What is not allowed to be credited for the sales of VAT-registrable persons?
input VAT credit is not allowed
13. What are goods and services that are subject to VAT?
14. Is the sale and importation of fuels subject to VAT?
Points to answer:
*sale is subj to vat
*importation of fuels, goods and supplies by person engaged in
-international shipping
-air transporting operations
Are exempt from VAT

15. What are the reforms introduced by VAT?

16. Give the general rules to apply in the determination of VAT.
17. The term 'export sales' means?
See Section 106. Letter A
18. What does Gross selling price mean?
19. What is taxable base?
Suggested answer: Valencia, page 504
20. Explain the difference between vat-exempt and zero-rated VAT.
21. Who introduced the value-added tax?
Ans: A certain Frenchman named Maurice Laure, introduced vat on wholesale items in
France in 1954.
22. Explain the destination principle of VAT system
23. What are the 3 conditions of optional VAT registration?
- Valencia, p.277
24. What are the incidental transactions subject to business taxes?

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See Valencia book, page 383; Incidental Transactions

25. True/false- the vat on importation is a business tax. If false, what are the three types of
business tax?
false. 2 types of consumption tax on domestic corp: VAT on importation & business tax.
3 types of business tax: vat on sales, percentage tax, excise tax
26. Who are required to file vat returns?
Any person or entity who, in the course of his trade or business, sells, barters, exchanges,
leases goods or properties and renders services subject to VAT, if the aggregate amount of
actual gross sales or receipts exceed One Million Nine Hundred Nineteen Thousand Five
Hundred Pesos (P1,919,500.00).
A person required to register as VAT taxpayer but failed to register
Any person, whether or not made in the course of his trade or business, who imports
goods
27. When is an export sales VAT-exempt?
28. If Mr. A leased a passenger vessel traveling from Philippines to Canada, will he be
subject or exempt to VAT?
(see the rules on sale, importation or lease of passenger/cargo vessels)
29. When will the husband and wife be considered as a separate taxpayer?
See Chapter 9 of Valencia
30. Does the sale of drugs and medicine to out-patients are subject to VAT?
31. What are the two types of consumption?
Answer: Domestic and Foreign
32. What do you mean by "Cross border Doctrine"?
"Cross Border Doctrine" means no VAT shall be imposed to form part of the cost of
goods destined for consumption OUTSIDE of the territorial border of the taxing
authority. Hence, actual export of goods and services from the Phil to a foreign country
must be free from VAT
33. Define consumption tax?
Is a tax upon utilization of goods or services by consumer or buyers. It is a tax on
purchase or consumption of the buyer and not on the sale of the seller
34. How much is the annual registration fee?
Answer: 500 for every separate and distinct establishment including facility type
35. When businesses give free goods for promotional purposes, can relative input VAT be
claimed as tax credit?
Dun sa first question, page 373 sa valencia 6th edition
36. ABC Company has land, sea and air transport operations. To improve its operation, ABC
company decided to import the following:
1. 5 busses
2. 2 airplanes
3. 7 ships

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Which of the following imports are exempted from VAT on importation?

ANS: The importation of Airplanes and Ships.
37. Why would a VAT-Exempt person elect to be subject to VAT?
Ans. The rationale of this option is that such VAT-exempt person may incur a large
amount of input tax in excess of his output tax, and such input tax can be credited against
any tax under the NIRC. In tha case, said VATable person, may elect to be subject to VAT
rather than being exempt.
Further, such election is irrevocable for a period of three years from the quarter the
election was made.
38. Importers Co. imports goods from Overseas Co. to be sold here in the Philippines. Buyers
Co. bought some of the imported goods from Importers Co. Which company is liable for
the VAT with respect to the importation of goods?
Suggested Answer: Importer's Co. Importers are the ones liable for VAT on importation
39. What are the two essential requisites of a business?
1.
Legally registered
2.
Engaged in activities not contrary to law, morals, good customs, public order or
public policy