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    Income Tax1

    Uploaded by

    Kim Joyce Pantanoza Alimorong
    The document discusses consumption taxes in the Philippines, including VAT and percentage taxes. It covers key concepts like domestic vs foreign consumption, statutory vs economic taxpayers, and taxes on the sale of goods and services by domestic and foreign businesses.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Income Tax1

    Uploaded by

    Kim Joyce Pantanoza Alimorong
    18 views3 pages
    The document discusses consumption taxes in the Philippines, including VAT and percentage taxes. It covers key concepts like domestic vs foreign consumption, statutory vs economic taxpayers, and taxes on the sale of goods and services by domestic and foreign businesses.

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    Income tax1.docx

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    © © All Rights Reserved

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    The document discusses consumption taxes in the Philippines, including VAT and percentage taxes. It covers key concepts like domestic vs foreign consumption, statutory vs economic taxpayers, and taxes on the sale of goods and services by domestic and foreign businesses.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views3 pages

    Income Tax1

    Uploaded by

    Kim Joyce Pantanoza Alimorong
    The document discusses consumption taxes in the Philippines, including VAT and percentage taxes. It covers key concepts like domestic vs foreign consumption, statutory vs economic taxpayers, and taxes on the sale of goods and services by domestic and foreign businesses.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Nature

    Scope
    Supporting tax theory

    The seller is
    Non-resident
    Resident

    Income tax
    Tax upon receipt of income
    A tax to the capable
    Ability to pay theory

    Consumption tax
    Tax upon usage of income or capital
    A tax to all
    Benefit received theory

    Domestic consumption
    Taxable
    Taxable

    Buyer

    Sellers of goods
    Domestic business
    - VAT registered business
    - Non-VAT-registered business
    Foreigners

    Resident

    Non-resident

    12% VAT on gross sales


    3% Percentage tax on gross sales
    12% VAT on landed cost of importation

    0% VAT on gross selling price


    Exempt
    Exempt

    Buyer

    Sellers of services
    Domestic business
    - VAT registered business
    - Non-VAT-registered business
    Foreigners

    Foreign consumption
    No tax
    Effectively no tax

    Resident

    Non-resident

    12% VAT on gross receipts


    3% Percentage tax on gross receipts
    12% final withholding VAT

    0% VAT on gross receipts


    Exempt
    Exempt

    Consumption Tax a tax upon the utilization of goods or services; tax on the purchase or consumption
    of the buyer and not on the sale of the seller.
    Rationale of Consumption Tax
    1 It promotes savings formation.
    2 It helps in wealth redistribution to society.
    3 It supports the Benefit Received Theory.
    Types of Consumption
    1 Domestic consumption consumption or purchase of Philippine residents.
    2 Foreign consumption consumption or purchase of non-residents.

    Destination principle goods and services destined for the use in the Philippines are subject to
    consumption tax.
    Cross-border doctrine goods that cross the border which are destined towards foreign territories are
    charge with consumption tax.

    Types of taxable domestic consumption


    1
    2

    Importation purchase of residents of goods or services from non-residents abroad.


    Sale - purchase of residents of goods, properties or services from resident sellers.

    CONSUMPTION TAX ON IMPORTATION


    VAT on importation every importer of goods shall pay consumption tax on his importation. 12% of the
    total import cost of the goods prior to the withdrawal of the goods from the warehouse of the Bureau of
    Customs.
    Withholding VAT every purchaser of service from non-residents shall likewise pay VAT on importation
    of the service. This Withholding VAT is computed as 12% of the contract price of the service.

    Statutory taxpayers the sellers are the ones named by law to pay the tax.
    Economic taxpayers the buyers are the ones who actually shoulder the tax burden; the real taxpayers.

    Basis of Business Taxes


    1. Sales for businesses which sells goods or properties. / total amount as consideration for the sale
    2. Receipts for businesses that sells services. / collections from the sale of service

    Types of Business Taxes


    1. VAT on sales a consumption tax imposed upon the sale of goods, properties or services.
    2. Percentage Tax
    3. Excise Tax an addition to either VAT or Percentage tax, if the taxpayer produces certain
    excisable goods such as alcohol or cigarettes.

    Types of Business Taxpayers


    1. VAT taxpayers those required to pay VAT
    2. Non-VAT taxpayers those who pay the percentage tax

    Characteristics of the VAT on sales


    1.
    2.
    3.
    4.
    5.

    Tax on value added


    Top-up on sales
    Tax credit method
    An explicit consumption tax
    Quarterly tax

    Methods of computing VAT

    1. Direct method is computed by applying the VAT rate to the difference of the selling price and
    the purchase.
    2. Tax credit method is imposed upon the sales and then reduced by the Output VAT paid by the
    business on its purchases.

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