VAT Calculations and Taxpayer Guidelines
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Allen KateVAT Calculations and Taxpayer Guidelines
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Allen KateCommon questions
Powered by AIM Corporation made total sales to the government amounting to ₱200,000 net of VAT. M Corporation can receive ₱200,000 from the government after accounting for the 1% Expanded Withholding Tax (EWT) applied to sales, as the gross sales would be higher but reduced by the EWT .
J. Reyes should consider that exceeding the ₱3,000,000 threshold necessitates VAT registration, which involves different tax implications. He needs to register for VAT within the prescribed period post-threshold achievement, i.e., July 1 to July 10, 2018, start paying taxes under VAT schemes from August 2018, and adjust his pricing and accounting systems to incorporate VAT. The responsibility for OPT applies only up to when his business remained under the gross receipts threshold .
The VAT payable is calculated based on the contract price net VAT and the cash received inclusive of VAT. Payments to suppliers, both for materials and services, allow for input taxes to be claimed against the output VAT liability. For instance, if the contract price is ₱5,000,000 net, the VAT on this amount is reduced by the input tax credits from materials and services expenses .
"Oplan Kandado" can be implemented against VAT-registered persons who fail to issue receipts, fail to file VAT returns, or understate their taxable sales by 30%. However, it is not used against those who understate their purchases by 30% .
The VAT payable for a VAT-registered stockbrokerage company is determined by calculating the VAT on commissions received and uncollected but earned. The taxable base is the sum of commission received (net of VAT) and commission uncollected, with the applicable VAT rate applied to this base. Any VAT paid on supplies can be credited against this amount .
Aside from the ₱120,000 worth of supply purchases, M Corporation can additionally deduct input taxes that are unattributed but allocated to sales. This involves calculating the proportional deduction of input tax applicable to the government sales, such as the ₱4,800 unattributed input tax .
No, a PEZA-registered enterprise paying the 5% preferential tax in lieu of all other taxes cannot claim a refund or Tax Credit Certificate (TCC) for VAT as it is exempt from VAT. Even if VAT is erroneously charged, the non-VAT registration status precludes them from claiming VAT refunds .
J. Reyes should register for VAT within 10 days after the end of the month in which his gross receipts exceeded ₱3,000,000, which was June 2018. Therefore, he should register between July 1 to July 10, 2018. He will become liable for VAT starting August 1, 2018. Furthermore, he will be liable for Other Percentage Tax (OPT) for the months January to June 2018 .
To mitigate the risk of "Oplan Kandado," VAT-registered individuals should maintain accurate sales and purchase records, ensure proper issuance of receipts, and timely file truthful VAT returns. Additionally, conducting regular internal audits can prevent the understatement of taxable sales by 30%, which triggers compliance measures under "Oplan Kandado" .
The correct output tax is found by extracting VAT from the total amount received. If the total amount including VAT is ₱570,000 and the stated value added tax is ₱70,000, the output tax is indeed ₱70,000 .