INPUT VAT Actual VAT:

Purchases from VAT suppliers x 12/112= xxx

Input VAT of the buyer is the output VAT on the
VAT sales invoice issued by the seller 2% of beginning inventory:
Purchases from VAT suppliers / 1.12 = xxx
Rule: if the VAT is not billed separately, the (to get VAT exclusive amount)
selling price stated in the sales document shall Purchases from non-VAT suppliers + xxx
be deemed to be inclusive of VAT TOTAL xxx
Multiply by: 2%
CREDITABLE INPUT VAT Xxx
Requisites: HIGHER: Transitional Input VAT
1. Must have been paid or incurred in the *note: goods should be VATable
course of trade or business
2. Evidenced by a VAT invoice or official receipt TIV- claimable in the month of registration as a
3. Issued by a VAT-registered person VAT taxpayer
4. Incurred in relation to VATable sales and not
from exempt sales. REGULAR INPUT VAT
-12% VAT paid on
Types of vatable sales: a. Domestic purchase of goods, services, or
a. Sales to the government properties or
b. Export sales b. Importation
c. Regular sales
Source of regular Timing of credit
-Purchases from non-VAT suppliers and of VAT- input VAT
exempt goods: have no input VAT Purchase goods or In the month of
-Input VAT on purchases not intended for properties purchase
business: non-creditable against the output VAT Purchase of services In the month paid
-Input VAT evidenced by ordinary receipt: non- Importation of goods In the month VAT is
creditable paid
Purchase of
depreciable capital
TYPES OF CLAIMABLE INPUT VAT goods or properties:
1. Transitional Input VAT General treatment In the month of
2. Regular Input VAT purchase
3. Amortization of Deferred Input VAT Monthly aggregate Amortized over
4. Presumptive Input VAT acquisition cost SHORTER of useful life
5. Standard Input VAT >1,000,000 excluding or 60 months (5 yrs)
6. Input VAT Carry-over VAT
Purchase of non- Not creditable
TRANSITIONAL INPUT VAT depreciable vehicles
- a person who elects to be VAT-registered: an on maintenance
initial input tax credit equivalent to: incurred thereon
HIGHER of
-2% of the beginning inventory of goods, *note: exceeding 1M, if 1M, still not amortized
materials or supplies OR Input VAT amortized: deferred input VAT
-actual VAT paid Monthly aggregate acquisition cost:
-total price excluding VAT agreed upon the
-2% basis: asset/s acquired
-should be VATable Asset not incurred in the course of business:
-excluding capital goods; non-creditable
-net of input VAT if purchased from VAT
seller If: asset was sold within 5 years or before
-goods exempt from VAT: excluded in the exhaustion of the deferred input VAT,
computation of the transitional input VAT The entire unamortized input tax can be
-stricticissmi juris not applicable claimed as input tax credit on the
month/quarter of sale.
 PRESUMPTIVE INPUT VAT
Special Rules on input tax credit Persons engaged in the processing of
1. Non-depreciable vehicles Sa MaMi Co PaRe
2. Construction in progress Sardines
3. Purchase of real property on installment Mackerel
4. Purchase of goods or properties deemed Milk
sold Cooking Oil
Packed noodles and
1. Input VAT on Non-depreciable vehicles Refined Sugar
Rules in the deductibility of depreciation -presumptive input tax: 4% of the gross value in
expense on vehicles: money of their purchases of primary
a. Only one vehicle for land transport is allowed agricultural products
for the use of an official or employee, the value -Sardines, mackerel. -not the basis of 4% PIV,
should not exceed 2,400,000 but the processors thereof (marine products)
b. No depreciation shall be allowed to yachts, “Processing”- pasteurization, canning, and
helicopters, airplanes/aircrafts and land vehicles activities which through physical or chemical
which exceed 2.4M threshold unless the process alter the exterior texture or form or
taxpayer’s main line of business is transport inner substance of a product.
operations or lease of transport equipment -tax incentive to processors of VAT-exempt raw
using such vehicles materials into processed food products
c. Purchase: substatiated Credit: in the month of purchase
d. Direct connection of the vehicles to the -processor for clients: cannot claim presumptive
development, operation and or conduct of the input vat because it does not own the raw
trade or business or profession of the taxpayer materials it processes
must be substantiated
STANDARD INPUT VAT
2. Input VAT o Construction in Progress
-considered purchase of service The sale of goods and services to the
-input tax: creditable upon payment of each government or any of its political subdivisions
progress billings of the contractor including GOCCs
-NOT credited upon completion of the -5% final withholding VAT based on the gross
construction NOR amortized over 60 months payment
-the gov’t shall remit the same within 10 days
Payment x 12/112 = creditable input VAT following the end of the month the withholding
-no further additional input VAT can be claimed was made
upon completion of the asset and when it is -sellers can claim an standard input VAT
depreciated equivalent to 7% (12%-5%) -creditable
Ex:
3. Input VAT on purchase of Real Property on Sales- 100,000
installments Invoice: 112,000
-If the Purchase is by installment and the seller Purchase price: 90,000 + 10,800 input VAT
is allowed to bill the output VAT in installment,
the buyer can also claim the input VAT in the Net proceeds the government shall release:
same period as the seller recognizes the output 107,000 (112,000-(100,00 x 5%))
VAT
Output VAT 12,000
4. Input VAT on goods or properties deemed Less: Std Input VAT 7,000
sold (ex: due to retirement from business) VAT Payable (5%) withheld) 5,000
Claimable input VAT:
The portion of the output VAT imposed upon
the goods deemed sold which corresponds to
the goods purchased by the buyer
(proportional)
INPUT VAT CARRY-OVER return
-excess input VAT over output VAT in a  Input tax carry-over, from previous
particular month or quarter period
 Deferred input tax on capital goods
Rules: exceeding 1M
1. Input VAT carry-over of the prior quarter is  Transitional Input tax
deductible in the first month of the current  Presumptive input tax
quarter  Regular Input VAT from:
2. The input VAT carry-over in the first month of  Purchases of capital goods
the quarter is deductible in the second month of not exceeding 1,000,000
the quarter  Purchase of capital good
3. The input VAT carry-over in the second exceeding 1,000,000
month of a quarter is not deductible to the third  Domestic purchases of
month of the quarter goods other than capital
4. The input VAT carry over of the prior quarter goods
is deductible in the third month quarterly  Importation of goods,
balance of the present quarter other than capital goods
 Domestic purchases of
What are excluded from input vat carry-over? services
1. Advanced VAT which have been applied for  Services rendered by
tax credit certificate non-residents
2. Input VAT attributable to zero-rated claim  Others
which have been applied for a tax refund or tax Total Available Input tax
credit certificate Less: Deductions from Input Tax:
3. Input VAT attributable to zero-rated sales  Input Tax on capital goods deferred
that expired after the two-year prescriptive for future periods
period  Input tax on sales to gov’t closed to
expense
Input VAT deductible against gross income  Input tax allocable to exempt sales
-Input VAT on exempt goods  Input VAT claimed as refunds/ TCC
-Excess input VAT (government)  Others
Total allowable (creditable) input tax

Allowable creditable input VAT in the VAT