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7. Finance companies 8. Life insurance companies 9. Agents of foreign insurance companies 10. Amusement places 11. Winnings from racehorse 12. Sale of shares of stock traded through the local stock exchange
Value-Added Tax
Value-added tax (VAT) is a tax on the gross selling price or gross receipt derived from the sale, barter or exchange and lease of goods or properties and rendering of services including importation, in the ordinary course of trade or business. It is an indirect tax, the burden of which may be shifted from one seller, transferor, or lessor to another until such burden is ultimately shouldered by the end-consumer.
VAT-Taxable Transactions
a. Sale, barter or exchange of goods or properties; b. Transactions deemed sale; c. Importation of goods; and d. Sale of services and use or lease of properties.
3. Consignment of goods if actual sale is not made within sixty (60) days following the date such goods were consigned; and 4. Retirement from or cessation of business, with respect to inventories of taxable goods existing as of such retirement or cessation.
5. Lessors or distributors of cinematographic films; 6. Persons engaged in milling, processing, manufacturing or repacking goods for others. 7. Proprietors, operators or keepers of hotels, rest houses, pension houses, inns, resorts, theaters and movie houses; 8. Proprietors or operators of restaurants, refreshment parlors, cafes and other eating places, including clubs and caterers.
9. Dealers in securities; 10. Lending investors; 11. Transportation contractors on their transport of goods and cargoes; 12. Domestic common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines;
13. Sale of electricity by generation, transmission and distribution companies; 14. Franchise grantees of electric utilities, telephone and telegraph, radio and/or television broadcasting and all other franchise grantees; 15. non-life insurance companies including surety, fidelity, indemnity and bonding companies; 16. pre-need companies; 17. Health maintenance organization; and 18. Similar services regardless of whether or not the performance thereof calls for the exercise or use of the physical or mental faculties.
Zero-Rated Sales
a. Export sales by VAT-registered person; b. Foreign currency denominated sale the sale to a non-resident of goods assembled or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable foreign currency, except: 1.) automobiles (Sec. 149, NIRC); and 2.) non-essential goods (Sec. 150, NIRC)
Zero-Rated Sales
c. Sales to persons or entities whose exemption is subject to special laws and international agreements (BCDA, PEZA, ADB and IRRI)
3. Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate; 4. Services rendered to persons engaged in international shipping or air transport operations, including leases of property for use thereof; provided, however, that the services referred to herein shall not pertain to those made by common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines;
5. Services performed by subcontrators and/or contractors duly accredited by either the Board of Investments or the Export Development Council in processing, converting, or manufacturing goods for an enterprise whose export sales exceed 70% of the total annual production; 6. Transport of passengers and cargo by domestic air or sea carriers from the Philippines to a foreign country; 7. Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels.
Definition of Terms:
Output tax is the value-added tax due on the sale or lease of taxable goods or properties or services by any person registered or required to register under the VAT system. Input tax is the value-added tax due from or paid by a VAT registered person in the course of his trade or business on importation of goods or local purchase of goods or services, including lease or use of property, from a VAT registered person, including the transitional input tax.
Treatment of the Excess of Output Tax or Input Tax over the Other
If the output tax exceeds the input tax at the end of any quarter, the excess shall be paid by the VAT registered person representing his VAT payable to the BIR. If the input tax exceeds the output tax at the end of any quarter, the excess shall be carried over to the succeeding quarter or quarters, provided:
1. The input tax inclusive of input VAT carried over from the previous quarter shall not exceed 70% of the output VAT; and 2. Any input tax attributable to zero-rated sales by a VAT registered persons may, at his option, be refunded or credited against other internal revenue taxes.
What other percentage taxes, aside from VAT are imposed under the NIRC?
a. Tax on persons exempt from VAT (3% on quarterly gross sales or receipts) b. Tax on domestic carriers and keepers of garages (3% on gross receipts) c. Tax on international carriers (3% of gross receipts) d. Tax on franchises (3%, 2%) e. Overseas communication tax (10% on amount paid for every overseas dispatch, message or conversation from the Philippines)
f. Tax on banks and non-bank financial intermediaries g. Tax on finance companies (3% on gross receipts from items of gross income) h. Tax on life insurance premiums (5% on total premiums collected from life insurance business) i. Tax on agents of foreign insurance companies (10% on total premiums)
j. Amusement taxes k. Tax on winnings in horse races l. Tax on sale/exchange of shares of stock listed and traded at the local stock exchange.
d. On net trading gains within the taxable year on foreign currency, debt securities, derivatives and other similar financial instruments.
Amusements
a. Cockpits- 18% b. Cabarets, night and day clubs- 18% c. Boxing exhibitions except those wherein world or oriental championship is at stake and at least one of the contenders is a citizen of the Philippines and promoted by a citizen of the Philippines or by a corporation or association at least 60% of the capital is owned by such citizens- 10%
Excise Taxes
Excise taxes apply to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported. The excise taxes shall be in addition to the value-added tax.
Nature of DST
The documentary stamp tax is a tax imposed on the transaction rather than on the document itself. It is an excise tax levied upon the privilege granted to the taxpayer so that he may enter into the transaction in the Philippines.
Does the failure to affix or stamp a document or paper affect the validity of the transaction?
It will not. However, the document or paper shall not be recorded nor shall any copy thereof be admitted or used in evidence in any court until the requisite stamp/s shall have been affixed thereto and cancelled. It shall prohibit any notary public or other officer authorized to administer oaths from adding his acknowledgment to any documents subject to the documentary stamp tax.