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THE PROBLEM

Statement of the Problem

The study aims to determine the VAT awareness among 4th year students

taking up Bachelor of Science in Business Administration major in Financial

Management at the University of San Jose-Recoletos.

Specifically, this study seeks to answer the following:

1. What is the profile of the student in terms of:

1.1 Gender;

1.2 Age;

1.3 Year Level?

2. What is the respondent’s extent of awareness about VAT in terms of:

2.1 Background or History of VAT.

2.2 Purpose or use of VAT.

2.3 Government regulations concerning collection of VAT.

2.4 Government agency tasked which collecting VAT.

3. Based on the results of the study, what proposals for improvement can be

developed to raise the level of awareness about VAT?

SIGNIFICANCE OF THE STUDY

The study will benefit different groups of individuals. Including:

The Respondent

The students will as a means of knowing their level of understanding

regarding the Value-Added Tax; such that the study will provide a means of

verification of knowledge or indicate a need of improvement, depending upon

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whether the results will confirm a high or low percentage and how this level of

knowledge will affect their daily economic decisions.

The Researchers

Through this study, the researchers will be able to apply theory-based

studies into an actual research work. They will be able to realize significance of

value added tax to the Filipino.

The Readers

This will become the readers’ source of information about the impact of

value added tax to every tax payers.

The Future Researchers

This study will serve as additional information and guide for their work that

engages taxes.

The College of Commerce

The study will serve as a guide to the effectiveness of its curriculum since

the study reflects the value added tax awareness in a subject which is a core

component of business knowledge. The study would give the administrators an

idea on what aspect of the business education is effective indicating a high level

of awareness or needs improvement if the results show otherwise.

The Government Agencies

Government agencies concerned, particularly the Bureau of Internal

Revenue, will have a general idea regarding the state of knowledge

dissemination of the Value-added Tax. The results can serve as a basis for

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starting a knowledge campaign to every Filipino, strengthening their

understanding of the Value-added Tax.

DEFINITION OF TERMS

The key terms in the study are given the following operational definitions.

BIR Ruling

This refers to an official administrative interpretation by the Bureau of

Internal Revenue of a particular provision of the National Internal Revenue Code

or implementing Revenue Regulations. Normally, a BIR Ruling does not include

administrative interpretation of concomitant interpretation of a VAT provision.

Business

Is synonymous with “trade” and is used interchangeably with the phrase

“trade or business.”

Cascade

Casading of the tax occurs when the tax is part of the taxable base that

will be taxed. Casading does not take place in the VAT system because the input

tax on taxable purchases has been credited against the output tax on taxable

sales.

Code

Unless otherwise specified, “Code” refers to the National internal Revenue

Code, as amended by R.A. 7716, 8241, and 8424.

Exempt transaction

Means the sale or leasing of goods and properties and the performance of

services, which are specifically listed and expressly exempt from VAT under

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S3ction 109, although such transactions are undertaken in the course of trade or

business.

Expenses

This represents a cost that is “paid” or “remitted”, usually in exchange for

something of value.

Financial Management

Means the efficient and effective management of money (funds) in such a

manner as to accomplish the objectives of the organization.

Governance

The way that a city, company, etc., is controlled by the people who run it.

Government

This refers to the system by which a state or community is governed.

Gross receipts

A tax term relating to the total business revenue from services provided

that must be reported for the fiscal period. Gross receipts do not account for

sales returns and allowances, cost of goods sold or any other deductible

expenses. Gross receipts can include both rental and interest income.

Gross sales

A measure of overall sales that isn't adjusted for customer discounts or

returns, calculated simply by adding all sales invoices, and not including

operating expenses, cost of goods sold, payment of taxes, or any other charge.

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Input

The purchase by a taxable person from another taxable person (who is

also a seller) are concomitantly sales transactions. From the perspective of the

purchaser, it constitutes and “input” which means the same as, and will be used

interchangeably with, taxable purchases.

Input tax

Means the VAT due from or paid by a VAT-registered person on

importation of goods or local purchase of goods or services, including lease or

use of property, in the course of his trade or business, from a VAT-registered

person. It includes transitional and presumptive input taxes perspective, input tax

is the VAT on the sales that shifted by a VAT-registered person to such buyer

who is also a VAT-registered person.

Money

This refers to any object or record that is generally accepted as payment

for goods and services and repayment of debts in a given socio-economic

context or country.

Non-VAT Person

Is a person who is engaged exclusively in the business of selling goods

and supply of services that are exempt from VAT.

Output

This means the same as, and will be used inter-changeably with, “taxable

base” and or the amount of sale, barter or exchange of goods and supply of

services which are subject to VAT.

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Output tax

This means 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

Code 236. In other words, it is the amount determined by applying the

appropriate rate of VAT on the sale or lease of goods, properties or supply of

services by a taxable person.

Regulations

This refers to the Revenue Regulations promulgated by the Secretary of

Finance upon recommendation of the Commissioner of Internal Revenue to

implement the provision of the National Internal Revenue Code or other special

law which is administered by the bureau of Internal Revenue.

Revenue

This refers to money that is collected for public use by a government

through taxes.

Sale

This is used in the textual discussion means “sale, barter or exchange.”

The only differences between the connotation of the terms “sale”, “barter” or

“exchange” lie in the nature of the consideration for the transfer of goods or

properties and supply of services. Consideration may consist of money,

something other than money or party something else.

Services

This includes leasing out of personal or real, tangible ornintangible

property.

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Taxable

Unless otherwise qualified when used to describe a transaction or a

person, the word means subject to VAT.

Taxable base

Means the amount or value on which the VAT rate will be applied in

computing the output tax. The taxable base for sales of goods or properties is

computed under the accrual method of accounting. The taxable base for supply

of services is computed under the cash method of accounting. The regulations

also permit, under certain conditions, the determination of the taxable base under

the installment method.

Taxable person

Is any individual, trust, estate, partnership, corporation, joint venture or

cooperative or association who makes, or intends to enter into taxable

transactions for which he is liable to pay VAT. Specifically, he is a person who is

1. Required to register and has actually registered with the appropriate Revenue

District Office; 2. Required to register but has opted under certain prescribed

conditions to register for purposes of VAT; and 3. a person who is compulsorily

required to register but has not registered.

Taxation

This refers to the act of a taxing authority actually levying tax. Taxation as

a term applies to all types of taxes, from income to gift to estate taxes. It is

usually referred to as an act; any revenue collected is usually called "taxes."

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Transaction

This means the sale, barter, exchange or leasing of goods and properties,

and the supply of services entered into by person who may be a taxable person

or exempt person.

USJR

University of San Jose-Recoletos, it is a catholic private university founded

in 1947 in Cebu City, Philippines by the Order of Augustinian Recollects. From

classes held in an old building and a portion of the convent, the school built

modern structures while retaining classic features.

VAT

Value added tax, indirect tax on the domesticconsumption of goods and

services, except those that are zero-rated (such as food and essential drugs) or

are otherwise exempt (such as exports). It is levied at each stage in the chain of

production and distribution from raw materials to the final sale based on the value

(price) added at each stage.

RESEARCH DESIGN

Research Methodology

This study will use the descriptive method of research. A survey will be

conducted using questionnaires. Interviews will be done to clarify the quantitative

results of the study. For the sources of data, the researchers will examine related

documents on Value-Added Tax.

Survey forms will be used in gathering data. The questions will be

formulated in such a way that responses would reflect the personal profile of the

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Financial Management students. Interviews questionnaires will also be used to

gather the needed data.

Research Environment

The research will conduct the study at the University of San Jose-

Recoletos main campus. It is situated along Magallanes Streets and Corner P.

Lopez in Cebu City. The opposite side of the university is the Freedom Park or

commonly called Carbon. The adjacent building is the Our Lady of Mt. Carmel

Parish-Recoletos. At the back of the building is the Borromeo Plaza II located at

Borromeo Street Corner P. Lopez.

The University of San Jose-Recoletos formerly known as Colegio de San

Jose-Recoletos was founded by the Order of Augustinian Recollects in 1947.

From classes held in an old building and a portion of the convent, the school built

modern retaining classic features.

The university expanded, while all the time developing QUALITY

CHRISTIAN COMMUNITY-ORIENTED EDUCATION. Three campuses, the main

campus located along Magallanes Street and Corner P. Lopez; the Basak

campus at Cebu South Road, BasakPardo, Cebu City and the newly built

Balamban Campus located in Arpili ,Balamban.

On September 21, 1984, then CSJ-R attained the UNIVERSITY STATUS.

Spanning years of accreditation and re-accreditation, USJ-R, Level 3, PAASCU,

was granted AUTONOMOUS STATUS by CHED in 2001.

The curricular programs of USJ-R evolved from traditional to innovative

course offerings. Arts and Sciences (started as liberal arts in 1947); Education

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(1947); Commerce (1948); Engineering (1961); Bachelor of Laws (1957); and the

Graduate School (1962). In 2003, the College of Information, Computer and

Communications Technology was created. The Expanded Tertiary Education

Equivalency and Accreditation Program (ETEEAP) followed in the same year. On

April 1, 2004, the Vertical Alignment of the undergraduate and graduate schools

took effect which established five graduate schools: Graduate School of

Business and Management, Graduate School of Arts and Sciences, Graduate

School of Information Technology and Computer Studies, Graduate School of

Education and Graduate School of Engineering. In June 2004, the B.S. in

Nursing started its first operation.

The College of Commerce is the largest and fastest growing college of

USJ-R. It offers courses such as Bachelor of Science in Accountancy, Bachelor

of Science in Business Administration, Bachelor of Science in Tourism and

Bachelor of Science in Hospitality Management.

The Bachelor of Science in Business Administration is divided into major

studies such as the General Course, Financial Management, Human Resource

Management, Marketing Management and Entrepreneurship.

In the College of Commerce taking up Bachelor of Science in Business

Administration Major in Financial Management, there are approximately 600

students.

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Figure 2: Location

Research Respondents

The respondents of the study will be 4th year students of the University of

San Jose-Recoletos enrolled in Bachelor of Science in Business Administration

major in Financial Management. This is to ensure that only those who have

undergone the two tax subjects with topics on value added tax will be interviewed

since they will by now have passed the subject. The researchers are not included

of this study.

Research Instrumentation

The researchers will use the self – made questionnaire as their main

instrument in gathering information regarding the profile, the history of value

added tax, the use and purpose of VAT, ideas related in government regulations

concerning collection of VAT, and the government agency which was tasked in

collecting VAT, the effectivity of the practices used by the students of the

University of San Jose-Recoletos. The questions were carefully studied and

properly organized in the questionnaire.

The questionnaire has three sections. The first section contains the profile

of the respondent’s base on their profile background.

The second section contains sets of questions on extent of awareness

about VAT in term of the history of value added tax, use, computing of VAT,

government regulations concerning collection of VAT, and Government agency

tasked which collecting VAT.

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Each question will be followed by a number of possible responses.

Corresponding to each response are numbers followed by qualitative scale and

their meanings, which are the following:

4 – VERY AWARE (VA) - means that the respondent is aware of all the

areas regarding VAT.

3 - AWARE (A) - means that the respondent is aware of

majority of the areas regarding VAT.

2 – LESS AWARE (LA) - means that the respondent is aware only of

some of the areas regarding VAT.

1 – NOT AWARE (NA) - means that the respondent is not aware of

anything about VAT.

The respondents were instructed to put a check mark on the space

provided each number, which represented their response to the questions.

The third section which was an additional data determined if the results of

the study were effective and suggestions for the improvement of the level of

awareness about VAT.

Data Gathering Technique

The researchers will personally give a letter to the Dean of College of

Commerce from University of San Jose-Recoletos to formalize the request to

conduct their research study about the level of awareness of Value-Added Tax.

After the letter will be approved, the researchers will immediately start to conduct

their data gathering.

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Data Analysis

After the answered questionnaires will be retrieved, the researchers

will process the data gathered for more accurate results. The data will be

grouped and tabulated.

The percentage methods will be used in analyzing the gathered data of

the profile of the respondents. The computed weighted mean will used to show

the results of the level of awareness of value-added tax among selected

Financial Management students.

The formula for the simple percentage is presented below:

P = f / n x 100

Where:

P = percent

f = frequency / number of responses

n = total number of respondents

100 = constant number used to convert into percent

For the computation of the weighted mean, the following was used:

μ= ∑ fx /n

Where:

Weighted mean

f= number of respondents

x = weigh assigned to each scale

n = number of respondents

Summation sign

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The following weights will be assigned to each scale:

4 - VERY AWARE (VA)

3 - AWARE (A)

2 - LESS AWARE (LA)

1- NOT AWARE (NA)

To arrive at a definite interpretation of the results for each item, the

researchers assigned presumed range of each scale.

The following is the interpretation of the each assigned weighted mean

thus:

Weighted Mean Range Interpretation

3.26 – 4.00 VERY AWARE

2.51 – 3.25 AWARE

1.76 – 2.50 LESS AWARE

1.00 – 1.75 NOT AWARE

The responses on the level of awareness of value-added tax will be

classified into the following indicators:

4 – Very Aware (VA) - means that the respondent is aware of

all the areas regarding VAT.

3 - Aware (A) - means that the respondent is aware of

majority of the areas regarding VAT.

2 – Less Aware (LA) -means that the respondent is aware

only of some of the areas regarding

VAT.

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1 – Not Aware (NA) -means that the respondent is not aware

of anything about VAT.