CHAPTER 9: INPUT VAT
acquisition of their beginning inventory of
INPUT VAT - Refers to VAT due or paid by a VAT
registered person on importation or local
purchases of goods, properties, or services,
including lease or use of properties in the course
of his trade or business.
What if the VAT is not separately billed?
- the selling price stated in the sales
document shall be deemed to inclusive of
VAT.
REQUISITES OF A CREDITABLE INPUT VAT:
1. The input VAT must have been paid o incurred
in the course of trade or business.
2. The input VAT is evidenced by a VAT invoice
or official receipt.
3. The VAT invoice or receipt must be issued by
a VAT registered person.
4. Input VAT is incurred in relation to vatable
sales not from exempt sales.
Note:
- the purchases from non-VAT suppliers
and purchases of VAT exempt goods or
properties have no input VAT
- The input VAT on purchase is not intended
for business (personal use) it's non
creditable against the output VAT
- input but evidenced by ordinary receipt
rather than by a VAT invoice or VAT official
receipt is not creditable.
A. TRANSITIONAL INPUT VAT
- equivalent to 2% of the VATABLE
beginning inventory of goods, materials, or
supplies or the actual VAT paid thereon
whichever is HIGHER.
COMPUTE THE TAX ON VATABLE GOODS:
Input VAT from Purchases from VAT sellers vs.
2% Transitional Input VAT whichever is higher
REQUISITES:
1. The taxpayer must submit an inventory list of
goods.
2. The taxpayer must prepare an entry
recognizing the transitional input VAT credit in
his accounting books.
TIMING OF CREDIT OF TRANSITIONAL INPUT
VAT:
- The transitional input VAT shall be
claimable in the month of registration as a
VAT taxpayer.
Note:
- the transitional input tax credit operates to
benefit newly VAT- registered persons
whether or not they previously paid taxes and
goods materials and supplies
- The transitional input VAT applies only to
beginning inventory of goods materials or
supplies excluding exempt beg. inventory,
equipment and other capital goods
- Input VAT is not part of the inventory to a
VAT taxpayer for income tax purposes. Hence
it must be removed from the basis of the 2%
transitional input VAT.
B. REGULAR INPUT VAT
- is the 12% VAT paid on domestic purchase
of goods, services, or properties, or
importation of goods or services.
TIMING OF CREDIT OF REGULAR INPUT VAT
SOURCES TIMING
Purchase of goods or properties Month of purchase
Purchase of services Month paid
Importation of goods Month VAT is paid
Purchase of depreciable capital goods or properties
- General treatment Month of purchase
- When the MONTHLY AGGREGATE Amortized over useful life
acquisition cost (cost excluding VAT) in moths or 60 months
exceeds P1,000,000 whichever is shorter.
Purchase of non-depreciable vehicles Not creditable
and on maintenance incurred
thereon.
C. AMORTIZATION OF DEFERRED INPUT
VAT
INPUT VAT on PURCHASE OF CAPITAL GOODS
OR PROPERTIES
IF THE MONTHLY AGGREGATE ACQUISITION COST OF
DEPRECIABLE CAPITAL GOODS (USEFUL LIFE >1 YEAR)
Does not exceed Input VAT is claimable in the month of
P1,000,000 purchase
Exceeds Amortized over useful life in months or
P1,000,000 60 months whichever is shorter.
The input VAT to be amortized is called “Deferred input
VAT”.
Note:
- Car for personal use is capital asset rather
than an ordinary asset subject to
depreciation; hence excluded from the
monthly aggregate acquisition cost.
- Goods for sale are not capital goods and
non-depreciable; hence excluded.
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