THE REGULAR OUTPUT VAT

Sources of Regular Output Vat: 3. SALE OF PROPERTIES (real)

1. Sale of Goods

2. Sale of Services Types of sale of properties: Taxability

3. Sale of Properties by dealer, developer, lessor of vatable

real properties
4. Transactions deemed sales
Properties considered ordinary vatable
assets
1. SALE OF GOODS Properties not in the course of exempt
business
-12% VAT on gross selling price in the month of
sale

-if: unreasonably lower selling price Sale of properties by a realty dealer

-VAT: based on the FAIR VALUE of goods
-subject to VAT on the gross selling price
-unreasonably lower: gross selling price is
lower by more than 30% of market value Gross selling price:

-if one of the parties is the government, HIGHER -consideration stated

VAT shall be based on actual selling price.
-fair value
-unreasonably lower selling prices
HIGHER -zonal value
do not apply to gov’t.
-assessed value

*if the “gross selling price” is based on the zonal

2. SALE OF SERVICES
value or assessed value of the property, the
-12% based in gross receipts in the month of zonal value or assessed value shall be presumed
collection exclusive of VAT.

-gross receipts: includes advances and

collection of amounts charged for labor and
Exempt sale by a Old law TRAIN law
materials
realty dealer of:

Residential lot 1,919,500 1,500,000

*note: Residential dwelling 3,199,200 2,500,000
Sale of Goods- month of sale

Sale of Services- month of collection

Sale of real property in installment plan

Sales of goods or services to senior citizens and -by a real estate dealer
persons with disability (PWD) by covered
establishments -initial payment does not exceed 25% of selling
price
-req’d: discounts of not less than 20%
Reportable output VAT:
Sales to senior citizens- exempt from VAT
(Payments/Selling price) x Output VAT
Sales to PWD- net of discount, subject to VAT
Amount billed for each installment: - a partner withdraws goods held for sale for his
personal consumption, deemed sale although
Installment
not recorded as sale by the business.
+ Output VAT
-there must be a transfer of ownership over the
property, thus transmission to a trustee shall
not be subject to VAT (merely held in trust)
Sale of property by a realty dealer on a
deferred payment basis -note: property must be an ordinary asset to be
vatable
- shall be treated as cash sale

Higher of FAIR VALUE or GROSS SELLING PRICE

2. Distribution or transfer to:
-subject to VAT in the month of sale
A. Shareholders or investors share in the
-Subsequent collections from the sale shall no profits of VAT-registered persons
longer be subjected to VAT.
-declared as property dividends at sales value

B. Creditors in payment of debt or obligation

Interests and penalties- received by the seller
are subject to VAT -payment of their loan under dacion en pago

Total amount billed:

Installment 3. Consignment of goods if actual sale is not

Interest made within 60 days following the date such
Penalty goods were consigned

+Output VAT (from ins, int, penalty) -if not withdrawn within 60 days are also
presumed or deemed sold subject to VAT,
although not an actual consumption
Sale of properties deemed “ordinary assets”

-properties held for use in the trade of the seller 4. Retirement from or cessation of business
with respect to all goods on hand whether
-vatable
capital goods, stock on trade, supplies or
materials as of the date of cessations, whether
or not the business is continued by the new
Sale of property not in the ordinary course of owner or successor
business
-will result in the transfer of all goods or
-sale of capital assets properties of the business to the personal use
-exempt from VAT or account of the business owner/s

-if business: continued by a new owner,

goods/properties of the business are effectively
sold to the new owner, hence deemed sold
4. TRANSACTIONS DEEMED SALES

Examples of taxable cessation of business:

1. Transfer, use or consumption not in the 1. Change of ownership of the business
course of business of goods or properties
originally intended for sale or for use in the 2. Dissolution of a partnership and creation of a
course of business. new partnership which takes over the business
 PRICE but
FAIR VALUE if
-the VAT on deemed sale applies only to vatable
selling price is
goods and properties of business or those
lower
considered ordinary assets. (ex: inventory, PPE)
Sale of Gross receipts In the month
Services collected
5. Cessation of status as a VAT-registered Sale of Real Gross selling In the month
person properties price (higher of sale or
of fair value spread
-goods or properties originally intended for sale or selling throughout
or use in the business as capital goods price) the collection
period under
Existing as of the occurence of any of the
the
following shall be deemed sold:
installment
A. Change of business activity from VAT-taxable method
status to VAT exempt status
Transactions Fair value of In the month
B. Approval of a request for cancellation of deemed sales the deemed deemed sold
registration due to reversion to exempt status sale

C. Approval of request for cancellation of

registration after the lapse of 3 years from the
time of registration by a person who voluntarily
registered despite being exempt

D. Approval of request for cancellation of

registration of once who commenced business
with the expectation of gross sales or receipts
exceeding threshold but who failed to exceed
during the first 12 months of operations

*Note on all deemed sale transactions

The rules of VAT on deemed sales of VAT-

taxpayers shall apply only if:

1. The property transferred is an ordinary asset

2. The property transferred is a vatable

property

-sale of properties considered as capital assets-

exempt from VAT

SUMMARY OF OUTPUT VAT TAX RULES

Source of VAT base Timing of

Regular reporting of
Output VAT Output VAT

Sale of goods GROSS In the month

SELLING of sale