Reniva, King Joshua B.
BSA III
1. Discuss the two scenario in VAT Registration.
Answer:
Every taxpayer subject to the value added tax must register with the BIR
as a VAT taxpayer and pay an annual registration fee for every separate
and distinct establishment where business is conducted.
Every person subject to any internal revenue tax (VAT and/or Non-VAT
taxpayers) shall register each one of his place of business or establishment with
the appropriate Revenue District Officer (RDO).
An annual registration fee in the amount of PhP500 each for every
separate or distinct establishment or place of business, including facility
types where sales transactions occur shall be paid upon registration,
and every year thereafter on or before the last day of January. Any
person commencing a business must pay the fee before engaging
therein. However, individuals engaged in business where the gross
sales or receipts do not exceed PhP100,000 during any 12-month
period and cooperatives other than electric cooperatives are not
required to pay the registration fee imposed in RR 16-2005.
Every taxpayer not subject to the value added tax but subject to the excise
tax or percentage tax must register with the BIR and pay an annual
registration where the business is conducted.
Persons, who are not VAT-registered, who sell goods, properties or services,
whose annual gross sales and/or receipts do not exceed three million pesos
(Php3,000,000.00) and are exempt from value-added tax (VAT) under Section 109 (BB)
of the National Internal Revenue Code, as amended by Republic Act (RA) No. 10963.
2.
Advantages of VAT
3. As VAT is a consumption tax the revenue generated will be constant.
4. Compared to other indirect tax VAT is easy to manage.
5. Due to catch-up effect of VAT, it minimizes avoidance.
6. Huge amount of revenue is generated on a low tax rate through VAT.
7. As the VAT is collected in small installments so the consumers has minimum
burden.
8. VAT is a neutral tax so it can be imposed on all types of business.
Disadvantages of VAT
As the VAT is based on full billing system, VAT
implementation is expensive.
It is not a simple task to calculate value added in every stage
is not an easy task. Thus VAT is difficult to understand.
VAT is regressive in nature. Thus it will affect the poor people
more than the rich because they spend more proportion of
their income.
All purchase and sales records should be maintained which
will cause increased in compliance cost.
The consumers need to be cognizant for successful
implementation of VAT otherwise tax negligence will be
extensive through fake invoices.
Mandatory Registration
Any person who, in the course of trade or business, sells, barters or exchanges goods
or properties or engages in the sale or exchange of services shall be liable to register if:
His gross sales or receipts for the past twelve (12) months, other than those that are
exempt under Section 109 (A) to (U), have exceeded Three Million Pesos
(P3,000,000.00): or
There are reasonable grounds to believe that his gross sales or receipts for the next
twelve (12) months, other than those that are exempt under Section 109 (A) to (U), will
exceed Three Million Pesos (P3,000,000.00).X
Businesses making taxable supplies beneath the VAT threshold can choose to register
voluntarily, and for many small companies, this can be helpful in greasing the wheels of
business with larger VAT registered clients.
Optional Registration
Any person who is not required to register as a VAT Taxpayer because the sales,
barters, or exchanges of service, in a twelve month period do not, or will not exceed
three million pesos, may opt to register under value – added tax system.
Industry covered by the VAT system may either register under OPT or VAT depending
on expected gross receipts or gross sales within the 12-month period whether or not it
would exceed P1,919,500.00.
1. If expected to exceed the threshold, then may opt to register as VAT. This is
optional and irrevocable for a period of three (3) years even if actual receipts do
not exceed the threshold.
2. If not expected to exceed the threshold, then, it may register under OPT until
such time that its gross receipts or gross sales exceed P1,919,500, in which case
it will be mandatory to register under VAT. Upon VAT registration, it is entitled to
claim transitional input VAT based on the higher amount between 2% of the
value of the inventory or actual input VAT on such purchases, whichever is
higher.Should it fail to register under VAT, then, it shall be liable for VAT, but
without the benefit of the input taxes because it only applies to VAT registered.
3. If its transactions are exempt from VAT, it may also opt to register as VAT. It may
then apply tax exemptions on such exempt transactions or apply VAT on the
exempt transactions. Once it opted to apply, then, the same is irrevocable
indefinitely.
VAT under Train Law
