E. SALE OF SERVICES AND USE OR LEASE OF PROPERTIES
1. Rate and base of VAT on sale of services
and use or lease of properties ........................................ 169 2. Taxation of advance payment by lessee .............................. 174 3. Meaning of certain terms..................................................... 174 4. Zero-rated sale of services.................................................... 179 5. Effectively zero-rated sale of service ................................... 182 6. Destination principle or Cross Border Doctrine ................. 182 7. Sales of goods, properties, or services by a VAT- registered supplier to a BOI-registered exporter......... 183 8. Meaning of gross receipts..................................................... 184 9. Treatment of security agency’s gross receipts .................... 188 10. Constructive receipt of payments ........................................ 190 11. Billing of VAT in the invoice................................................ 191 12. Services rendered under an employer- employee relationship .................................................... 192 F. EXEMPTIONS 1. Exempt transactions ............................................................ 192 2. Explanation of the exemptions ............................................ 199 3. Self-employed and professionals availing of 8% tax on gross sales/receipts .................................................. 210 4. Transitory provisions under the CREATE Law ................ 211 5. Election to subject exempt transactions to VAT................. 214 6. Zero-rating ............................................................................ 215 7. Exemptions in general ......................................................... 216 8. Distinction between zero-rating and exemption................. 216 G. TAX CREDITS OR REFUNDS 1. Tax credit system adopted for VAT ..................................... 217 2. Input tax on depreciable goods ............................................ 221 3. Input tax on non-depreciable vehicles................................. 225 4. Refunds or tax credits of input tax...................................... 226 5. Amount of refund or tax credit ............................................ 230 6. Substantiation of input tax credits...................................... 231 H. COMPUTATION OF THE TAX 1. In general.............................................................................. 232 2. Computation of output tax................................................... 233
THE LAW ON TRANSFER AND BUSINESS TAXATION
Chapter 2. — VALUE-ADDED TAX A. PRELIMINARY TOPICS
1. Definition of value-added tax............................................... 139 2. Tax base of VAT ................................................................... 139 3. Nature of VAT ...................................................................... 139 4. The VAT system ................................................................... 140 B. IMPOSITION OF THE TAX 1. Meaning of certain terms..................................................... 143 2. Persons liable to VAT........................................................... 144 C. SALE OF GOODS OR PROPERTIES 1. Requisites for liability ......................................................... 144 2. Activity in trade or business ............................................... 145 3. Transactions incidental to pursuit of commercial or economic activity ...................................................... 147 4. Rate and base of VAT on sale of goods or properties.......... 148 5. Zero-rated sale of goods or properties ................................. 149 6. Effectively zero-rated sale of goods or properties ............... 152 7. Export sales under the Omnibus Investment Code ........... 153 8. Meaning of certain terms..................................................... 154 9. Transactions involving real properties ............................... 155 10. Transactions taxable as sales .............................................. 158 11. Transactions deemed sale .................................................... 159 12. Tax base of deemed sale transactions ................................. 159 13. Retirement from or cessation of business ........................... 160 14. Change in or cessation of status as a VAT-registered person................................................... 160 15. Determination of tax base.................................................... 162 16. Meaning of gross selling price ............................................. 162 17. Determination of amount of gross selling price of real property ..................................................... 162 18. Allowable deductions from gross selling price.................... 164 D. IMPORTATION OF GOODS 1. Rate and base of VAT on importation of goods................... 165 2. Rationale for imposing VAT on importation of goods ........................................................................... 166 3. When importation begins and ends..................................... 167 4. Meaning of certain terms..................................................... 168
3. Determination of input tax deductible
during a taxable quarter ............................................... 237
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4. Apportionment of input taxes between
taxable and exempt operations ..................................... 237 5. Computation of VAT payable or excess tax credits ............ 243 6. Excess output/input tax ....................................................... 245 I. COMPLIANCE REQUIREMENTS 1. Re gistration of taxpayers ..................................................... 245 2. Registration of non-VAT or exempt taxpayer..................... 250 3. Compliance activities after registration as VAT taxpayer ................................................................. 252 4. Cancellation/update of VAT registration ............................ 253 5. Change of address ................................................................ 255 6. Invoicing and accounting requirements for VAT-registered persons ........................................... 255 7. Issuance of duly registered invoice or receipt..................... 258 8. Information to appear on official receipts/sales invoices, etc. ................................................................... 259 9. Invoicing and recording “deemed sale” transactions.......... 259 10. Filing of return and payment of VAT.................................. 261 11. Withholding of VAT.............................................................. 268 12. Persons required to withhold VAT ...................................... 269 13. Returns and payment of VAT withheld .............................. 270 14. Certificate of VAT withheld ................................................. 270 15. Substituted VAT Return ...................................................... 271 16. Regular VAT return ............................................................. 272 17. Substituted official receipt ................................................... 272 18. Cancellation of option given to taxpayer............................. 273 19. Submission of quarterly Summary Lists of Sales/Purchase ............................................................... 273 20. Power of the Commissioner to suspend business operations of a taxpayer ................................. 275 21. Surcharge, interest, and other penalties ............................ 276
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E. SALE OF SERVICES AND USE OR LEASE OF PROPERTIES
1. Rate and base of VAT on sale of services
and use or lease of properties ........................................ 169 2. Taxation of advance payment by lessee .............................. 174 3. Meaning of certain terms..................................................... 174 4. Zero-rated sale of services.................................................... 179 5. Effectively zero-rated sale of service ................................... 182 6. Destination principle or Cross Border Doctrine ................. 182 7. Sales of goods, properties, or services by a VAT- registered supplier to a BOI-registered exporter......... 183 8. Meaning of gross receipts..................................................... 184 9. Treatment of security agency’s gross receipts .................... 188 10. Constructive receipt of payments ........................................ 190 11. Billing of VAT in the invoice................................................ 191 12. Services rendered under an employer- employee relationship .................................................... 192 F. EXEMPTIONS 1. Exempt transactions ............................................................ 192 2. Explanation of the exemptions ............................................ 199 3. Self-employed and professionals availing of 8% tax on gross sales/receipts .................................................. 210 4. Transitory provisions under the CREATE Law ................ 211 5. Election to subject exempt transactions to VAT................. 214 6. Zero-rating ............................................................................ 215 7. Exemptions in general ......................................................... 216 8. Distinction between zero-rating and exemption................. 216
Chapter 3. — OTHER PERCENTAGE TAXES A. PRELIMINARY TOPICS
1. Definition of percentage tax................................................. 277 2. Basically, a gross receipts tax.............................................. 277 3. Liability for the 3% (now 1%) percentage tax..................... 278 4. Measurement of percentage tax .......................................... 278
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