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Understanding VAT Liability and Registration

1. All of the following are subject to value added tax (VAT): a) any person who sells, barters, exchanges or leases goods or properties in the course of trade or business; b) any person who renders service in the course of trade or business; c) any person who imports goods. 2. In the case of importation of taxable goods, the importer, whether an individual or corporation, is liable to VAT regardless of whether the importation was made in the course of trade or business. 3. For VAT purposes, a taxable person is anyone liable to pay VAT, whether registered or required to register according to tax code. A person's status as a VAT-

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296 views2 pages

Understanding VAT Liability and Registration

1. All of the following are subject to value added tax (VAT): a) any person who sells, barters, exchanges or leases goods or properties in the course of trade or business; b) any person who renders service in the course of trade or business; c) any person who imports goods. 2. In the case of importation of taxable goods, the importer, whether an individual or corporation, is liable to VAT regardless of whether the importation was made in the course of trade or business. 3. For VAT purposes, a taxable person is anyone liable to pay VAT, whether registered or required to register according to tax code. A person's status as a VAT-

Uploaded by

Jen Bernadette Ciego
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

1. Which of the ff shall be subject to Value added tax?

a) Any person who, in the course of his trade or business, sells, barters, exchanges or
leases goods or properties.
b) Any person who, in the course of his trade or business, renders service.
c) Any person who imports goods.
d) All of the choices.

2. In the case of importation of taxable goods, who shall be liable to VAT?


a) Importer, whether an individual or corporation and whether or not made in the
course of his trade or business.
b) Importer if made in the course of trade or business only.
c) Importer if corporation and only when made in the course of trade or business.
d) None of the choices.

3. First Statement: For VAT purposes, a taxable person is any person liable to pay the VAT,
whether registered or registrable in accordance with the Tax Code.
Second Statement: The status of a ‘VAT registered person” as a VAT registered person
shall continue until the cancellation of such registration.
a) Both statements are correct. c) Only the first statement is correct.
b) Both statements are incorrect. d) Only the second statement is correct.

4. This refers to any person who is required to register under the provisions of the Tax
Code but failed to register?
a) VAT Registered person. c) VAT Exempt person.
b) VAT Registrable person. d) None of the choices.

5. Who shall be statutorily liable to pay for the tax on sale of goods or properties and sale
of services and lease of properties?
a) Buyer. c) Consumer.
b) Seller. d) None of the choices.

6. Value Added Tax is?


a) a specific tax. c) a local tax.
b) an indirect tax. d) progressive tax.
7. No VAT shall be imposed to form part of the cost of goods sold destined for consumption
outside of the territorial border of the taxing authority?
a) Cross border doctrine. c) Constructive receipt doctrine.
b) Rule of Reciprocity. d) International Comity.

8. Goods and services are taxed only in the country where these are consumed?
a) Destination principle. c) Equity principle.
b) Separability principle. d) None of the choices.

9. The term “in the course of trade or business” does not include:
a) regular conduct or pursuit of a commercial or economic activity.
b) incidental transactions.
c) transactions by any person regardless of whether or not the person engaged
therein is a non-stock, non-profit private organization (irrespective of the
disposition of its net income and whether or not it sells exclusively to members or
their guests), or government entity.
d) None of the choices.

10. A VAT registered owner of a shoe store wants to replace the old display cabinets in the
store. He decides to sell them. He asks whether or not the sale of display cabinets used in
his store is subject to VAT. What answer will you give him?
a) No, the sale of display cabinets used in the shoe store is not subject to VAT
because it is not considered his regular conduct or pursuit of commercial or
economic activity.
b) Yes, the sale of display of cabinets used in the shoe store is subject to VAT
because it is considered an incidental transaction to his regular conduct or pursuit
of commercial or economic activity.
c) No, the sale of display cabinets used in the shoe store is not subject to vat because
he is not a dealer of display cabinets.
d) Yes, the sale of display cabinets used in the shoe store is subject to VAT because,
as a rule such sale is always subject to VAT.

Common questions

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An importer becomes liable to VAT independent of whether the importation is conducted as part of trade or business or not. Specifically, any importer, be they an individual or corporation, is subject to VAT on importation of taxable goods .

A VAT registered person is someone who is officially registered and recognized under VAT laws, while a VAT registrable person is someone who meets the criteria for VAT registration but has not yet completed the registration process .

Goods and services are taxed in the country where they are consumed, in accordance with the Destination Principle .

The Cross Border Doctrine prevents VAT from being included in the cost of goods sold for consumption outside the taxing authority's territorial borders .

The sale of used display cabinets by a shoe store owner is subject to VAT because it is considered an incidental transaction related to their regular commercial activity, regardless of regular dealings in such items .

A person remains as a 'VAT registered person' until the cancellation of their registration. This status is upheld even if they are merely registrable according to the Tax Code, thus ensuring continuity of their liability .

Value Added Tax is classified as an indirect tax, meaning it is levied on the consumption of goods and services and ultimately paid by the end consumer, but collected by the businesses providing those goods and services .

The seller is statutorily responsible for the payment of VAT on the sale of goods or properties, the rendering of services, and lease of properties .

The term 'in the course of trade or business' does not include incidental transactions or activities not regularly pursued as a commercial or economic activity. This includes broader transactions by entities like non-stock, non-profit organizations, and government entities irrespective of income disposition .

A person is subject to Value Added Tax (VAT) if, in the course of conducting trade or business, they engage in selling, bartering, exchanging, or leasing goods or properties, rendering services, or importing goods .

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