value added tax notes

8/13/2019 Value Added Tax Notes

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GUIDE NOTES ON VALUE-ADDED TAX

VALUE-ADDED TAX

Q. W HAT IS THE NATURE AND CONCEPT OF VALUE -ADDED TAXES ?

* VAT is a percentage tax. There is a percentage fixed by law which will be applied tothe gross selling price in order to arrive to the VAT to be paid.

[CIR v. Seagate Technology (Philippines), GR No. 153 !!, 11 "e#. $%%5.& is a caseon a clai' o ta* e +n -c e it o allege +n+tili e inp+t /0T pai on capital goo s

o the pe io 1 0p il 1 to 3% 2+ne 1 . It e*plaine the concept of a value- added tax , th+s

Viewed broadly, the VAT is a uniform tax ranging, at present, from 0 percent to 1 !levied on every importation of goods, whether or not in the course of trade orbusiness, or imposed on each sale, barter, exchange or lease of goods or propertiesor on each rendition of services in the course of trade or business as they pass alongthe production and distribution chain, the tax bei ! "i#ite$ % "& t% the 'a"(e a$$e$t% )(*h !%%$)+ , %,e tie) % )e 'i*e) b& the )e""e , transferor or lessor.

"t is an indirect tax that may be shifted or passed on to the buyer, transferee or lesseeof the goods, properties or services. As such, it should be understood not in thecontext of the person or entity that is primarily, directly and legally liable for itspayment, but in terms of its nature as a tax % *% )(#,ti% .

#ituations that may arise$ %&eneral 'rinciples(

. I/ at the e $ %/ a taxab"e 0(a te the %(t,(t taxe) *ha !e$ b& a )e""e a ee0(a" t% the i ,(t taxe) ,a))e$ % b& the )(,,"ie )+ % ,a&#e t i)

e0(i e$.

1. I/ at the e $ %/ a taxab"e 0(a te + the %(t,(t taxe) ex*ee$ the i ,(t taxe)+the ex*e)) ha) t% be ,ai$ b& the )e""e .

). "f the input taxes exceed the output taxes, the excess shall be carried over to thesucceeding uarter or uarters

+. "f the input taxes result from 2e %- ate$ or e//e*ti'e"& 2e %- ate$ t a )a*ti% )or from a*0(i)iti% %/ *a,ita" !%%$) any excess over the output taxes shallbe refunded to the taxpayer % credited against other internal revenue taxes.

* iting CIR v. Seagate Technology (Philippines) , the case of Panasonic

Co''+nications I'aging Co po ation o the Philippines v. CIR explained value-added tax in this wise$

The VAT is a tax on consumption + a i $i e*t tax that the , %'i$e %/ !%%$) %)e 'i*e) #a& ,a)) % t% hi) *()t%#e ) .

/nder the VAT method of taxation, which is i '%i*e-ba)e$ , an entity can subtractfrom the VAT charged on its sales or outputs the VAT it paid on its ,( *ha)e) ,i ,(t) and i#,% t) .

• or example, when a seller charges VAT on its sale, it issues an invoice to thebuyer, indicating the amount of VAT he charged.

• or his part, if the buyer is also a seller sub ected to the payment of VAT on hissales, he can use the invoice issued to him by his supplier t% !et a e$(*ti% %/hi) %3 VAT "iabi"it& .

• The difference in tax shown on invoices passed and invoices received is the taxpaid to the government.

• I *a)e the tax % i '%i*e) e*ei'e$ ex*ee$) that % i '%i*e) ,a))e$+ a taxe/( $ #a& be *"ai#e$ .2

Q4 DEFINE AND DIFFERENTIATE INPUT TAX AND O UTPUT TAX.

The case of CIR v. 4eng+et Co po ation defined input tax2 and output tax.2I ,(t tax O(t,(t tax

"nput VAT or input tax represents theactual payments, costs and expensesincurred by a VAT-registered taxpayer inconnection with his purchase of goodsand services

Thus, 5i ,(t tax5 #ea ) the 'a"(e-a$$e$ tax ,ai$ b& a VAT- e!i)te e$,e )% 6e tit& i the *%( )e %/ hi)6it)t a$e % b()i e)) % the i#,% tati%%/ !%%$) % "%*a" ,( *ha)e) %/ !%%$)

% )e 'i*e) / %# a VAT- e!i)te e$,e )%

3hen that person or entity sells his4itsproducts or services, the VAT-registeredtaxpayer !e e a""& becomes liable for1 ! of the selling price as output VAT oroutput tax.

5ence, 5%(t,(t tax5 i) the 'a"(e-a$$e$tax % the )a"e %/ taxab"e !%%$) %)e 'i*e) b& a & ,e )% e!i)te e$ %

e0(i e$ t% e!i)te ( $e Se*ti% 78%/ the 9%"$: Tax C%$e.

Q4 HOW CAN A VAT- REGISTERED TAXPA;ER RECOVER ITS INPUT VAT?

The VAT system of taxation allows a VAT-registered taxpayer to recover its input VATeither by



%1( passing on the 1 ! output VAT on the gross selling price or gross receipts, as thecase may be, to its buyers, or

% ( if the input tax is attributable to the purchase of capital goods or to 6ero-ratedsales, by filing a claim for a refund or tax credit with the 7"8.

#imply stated, a taxpayer sub ect to 1 ! output VAT on its sales of goods andservices may recover its input VAT costs by passing on said costs as output VAT toits buyers of goods and services but it cannot claim the same as a refund or taxcredit, while a taxpayer sub ect to 0! on its sales of goods and services may onlyrecover its input VAT costs by filing a refund or tax credit with the 7"8.

Q4 I""()t ate i ,(t tax+ %(t,(t tax a $ VAT ,a&ab"e

9 orp, manufacturer, sold goods to :, a retailer, for 100,000 plus vat of 1 ,000 %so :bought it for 11 ,000( Then, : resold the goods to ;, end-consumer for 1<0,000 plusVAT of 1=,000 %so ; bought it for 1>=,000(

?n the part of :, the retailer,

-5is "@'/T TA9 is 1 ,000 because this tax was passed on to him when he boughtgoods from 9 orp.

-5is ?/T'/T TA9 is 1=,000 because this is the tax he passed on to ;.

-"n this case, : will pay for4ultimately be liable for the vat of >,000 on the sale becausethe output tax is greater than the input tax. % see $ n sit+ation in i st page)

Q4 I""()t ati'e , %b"e# 9C%-U tia :

9 is a VAT registered person. 5e bought goods from : for 1 ,<00, exclusive of VAT.9 then sold these goods to consumer ; for 1<,000, exclusive of the VAT

%a( 5ow much is the VAT payable by 9 to the 7"8

9Bs purchase has an input tax of 1,<00 %1 ,<00 x 1 !( and his re-saletransaction has an output tax of 1,=00 %1<,000 x 1 !( The VAT payable by9 is the difference of the output tax and the input tax thus it is )00 %1=00-1<00(

%b( 5ow much can 9 claim as a tax credit

9 may claim the 1,<00 input tax on his purchase as a tax credit. This is whyit was deducted from 1,=00.

%c( an ; claim a tax credit

@o. 5e is the end-consumer. 5e ultimately bears the tax burden.

SEC. 105. Persons Liable . –

Any person who, in the course of trade or business, sells barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VA ! imposed in "ections #$% to #$& of this 'ode.

he value-added tax is an

indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. his rule shall li ewise apply toexisting contracts of sale or lease of goods, properties or services at the time of the effectivityof )epublic Act *o. ++#%.

he phrase in the course of trade or business means the regular conduct or pursuit of acommercial or an economic activity, including transactions incidental thereto, by any personregardless of whether or not the person engaged therein is a non-stoc , nonp-rofit privateorgani ation (irrespective of the disposition of its net income and whether or not it sellsexclusively to members or their guests!, or government entity.

he rule of regularity, to the contrary notwithstanding, services as defined in this 'oderendered in the hilippines by nonresident foreign persons shall be considered as being courseof trade or business.

Q4 UNDER ST

PARAGRAPH OF S EC 7<+ WHAT ARE THE VAT- A=LE TRANSACTIONS ?CS 0 6 , I 7P8RT0TI8N 0N9 S 6R/IC6S &

1. #ale, barter, exchange of goods or properties. Transactions deemed sale

). "mportation of goods C does not have to be exercised in the ordinarycourse of busines ) D

+. #ale of services and use or lease of properties

Q4 UNDER P AR 1+ VAT IS AN INDIRECT TAX . D ISTINGUISH =ETWEEN LIA=ILIT; FOR THE TAX AND =URDEN OF THE TAX .

* The case of Conte* Co po ation v. CIR made a distinction between the twoconcepts. "t provided CC ontex orporation v. "8, &8 @o. 1<11)<, Euly 00+.D

At this uncture, it must be stressed that the VAT is an indirect tax. As such, theamount of tax paid on the goods, properties or services bought, transferred, or leasedmay be )hi/te$ or ,a))e$ % by the seller, transferor, or lessor to the buyer,transferee or lessee.

/nliFe a direct tax, such as the income tax, which primarily taxes an individualBs abilityto pay based on his income or net wealth, an indirect tax, such as the VAT , is a taxon consumption of goods, services, or certain transactions involving the same .

The VAT, thus, forms a substantial portion of consumer expenditures.



• urther, in indirect taxation, there is a need to distinguish between the liability forthe tax and the burden of the tax.

• As earlier pointed out, the amount of tax paid may be shifted or passed on by theseller to the buyer.

o What i) t a )/e e$ i )(*h i )ta *e) i) %t the "iabi"it& /% the tax+b(t the tax b( $e .

o "n adding or including the VAT due to the selling price, the sellerremains the person primarily and legally liable for the payment of thetax. 3hat is shifted only to the intermediate buyer and ultimately to thefinal purchaser is the burden of the t ax.

State$ $i//e e t"&+ a )e""e 3h% i) $i e*t"& a $ "e!a""& "iab"e/% ,a&#e t %/ a i $i e*t tax+ )(*h a) the VAT % !%%$)% )e 'i*e) i) %t e*e))a i"& the ,e )% 3h% ("ti#ate"&bea ) the b( $e %/ the )a#e tax.

It i) the /i a" ,( *ha)e % *% )(#e %/ )(*h !%%$) %)e 'i*e) 3h%+ a"th%(!h %t $i e*t"& a $ "e!a""& "iab"e /%the ,a&#e t the e%/+ ("ti#ate"& bea ) the b( $e %/ thetax.

Q4 WHAT IS >EANT =; IN THE COURSE OF TRADE OR =USINESS @?

* The case of CIR v. 7agsaysay ines, Inc &8 @o. 1+>G=+ . involved the sale by the@ational Hevelopment ompany of five of its vessels to Iagsaysay Jines, "nc. Theissue was whether such sale was within the coverage of VAT. The #upreme ourtfound that the sale of t he vessels was not in the ordinary course of t rade or business.

As such, the transaction was outside the coverage of VAT.

That the sale of the vessels was not in the ordinary course of trade or business of@H was appreciated by both the TA and the ourt of Appeals, the latter doing soeven in its first decision which it eventually reconsidered. 3e cite with approval the

TABs explanation on this point$

"n I#,e ia" '. C%""e*t% %/ I te a" Re'e (e , &.8. @o. J-KG +, #eptember )0, 1G<<%GK 'hil. GG (, the term Lcarrying on businessL does not mean the performance of asingle disconnected act, but means conducting, prosecuting and continuing businessby performing progressively all the acts normally incident thereofM while L $%i !b()i e)) L conveys the idea of business being done, not from time to time, but all the

time.

LC%( )e %/ b()i e)) L is what is usually done in the management of trade orbusiness.

3hat is clear therefore, based on the aforecited urisprudence, is that Lcourse ofbusinessL or Ldoing businessL connotes regularity of activity. "n the instant case, thesale was an isolated transaction. The sale which was involuntary and made

pursuant to the declared policy of Government for privatization could no longer

be repeated or carried on with regularity . "t should be emphasi6ed that the normalVAT-registered activity of @H is "ea)i ! ,e )% a" , %,e t& . This finding is confirmed by the 8evised harte of the @H which bears no indicationthat the @H was created for the primary purpose of selling real property. The conclusion that the sale was not in the course of trade or business, which the "8does not dispute before this ourt should have definitively settled the matter. Anysale, barter or exchange of goods or services %t i the *%( )e %/ t a$e %b()i e)) is not sub ect to VAT.

The decision contained an explanation of VAT, to wit$

• A brief reiteration of the basic principles governing VAT is in order. VAT isultimately a tax on consumption, even though it is assessed on many levels oftransactions on the basis of a fixed percentage.

• "t is the end user of consumer goods or services which ultimately shoulders thetax, as the liability therefrom is passed on to the end users by the providers ofthese goods or services who in turn may credit their own VAT liability %or inputVAT( from the VAT payments they receive from the final consumer %or outputVAT(.

• The final purchase by the end consumer represents the final linF in a productionchain that itself involves several transactions and several acts of consumption.

• The VAT system assures fiscal ade uacy through the collection of taxes on everylevel of consumption, yet assuages the manufacturers or providers of goods andservices by enabling them to pass on their respective VAT liabilities to the nextlinF of the chain until finally the end consumer shoulders the entire tax liability.

• :et VAT is not a singular-minded tax on every transactional level. It)a))e))#e t bea ) $i e*t e"e'a *e t% the tax,a&e ) %"e % "i B i the, %$(*ti% *hai . 5ence, as affirmed by #ection GG of the Tax ode and itssubse uent incarnations, the tax i) "e'ie$ % "& % the )a"e+ ba te %ex*ha !e %/ !%%$) % )e 'i*e) b& ,e )% ) 3h% e !a!e i )(*h a*ti'itie)+i the *%( )e %/ t a$e % b()i e)).



o These transactions outside the course of trade or business mayinvariably contribute to the production chain, but they do so only as amatter of accident or incident.

o As the sales of goods or services do not occur within the course of tradeor business, the providers of such goods or services would hardly, if atall, have the opportunity to appropriately credit any VAT liability asagainst their own accumulated VAT collections since the accumulationof output VAT arises in the first place only through the ordinary courseof trade or business(

** "n the case of CIR v. C0 , ?IA#N8 ?, being a non-stocF non-profit organi6ation,contended that it 3a) %,e ati ! % a ei#b( )e#e t-%/-*%)t ba)i) , that it)%,e ati% ) 3e e %t , %/it-% ie te$ a $ %t i the *%( )e %/ t a$e %/ b()i e)) ,2and that therefore, it was not liable to pay VAT. The #upreme ourt held that #ection10< of the 1GGK Tax ode was clear and unambiguous in stating that even non-stocFnon-profit organi6ations were liable to pay VAT on the sale of goods or services.

***N. . ooch !ifference of "#$ v. %agsaysay v. "#$ v. "&, "omaserco'

SEC. 106. Value-Added Tax on Sale of Goods or Properties. -(A! )ate and /ase of ax. - here shall be levied, assessed and collected on every sale, barteror exchange of goods or properties, value-added tax e0uivalent to twelve percent (#12! of thegross selling price or gross value in money of the goods or properties sold, bartered orexchanged, such tax to be paid by the seller or transferor.

(#! he term oods or!properties! shall mean all tan ible and intan ible ob"e#ts $%i#%are #apable of pe#uniar& esti'ation and s%all in#lude 3 (a! )eal properties held primarily for sale to customers or held for lease in the ordinary courseof trade or business4

(b! he

right or the privilege to use patent, copyright, design or model, plan, secret formula or process, goodwill, trademar , trade brand or other li e property or right4

(c! he right or the privilege to use in the hilippines of any industrial, commercial orscientific e0uipment4

(d! he right or the privilege to use motion picture films, tapes and discs4 and

(e! )adio, television, satellite transmission and cable television time.

he term ! ross sellin pri#e! means the total amount of money or its e0uivalent which the purchaser pays or is obligated to pay to the seller in consideration of the sale, barter orexchange of the goods or properties, excluding the value-added tax. he excise tax, if any, onsuch goods or properties shall form part of the gross selling price.

Q4 WHAT IS A SALE OF GOODS OR PROPERTIES @?

* "n "#$ v. (ony )hilippines, #nc ., #ony 'hilippines engaged the services of severaladvertising companies.

Hue to #ony 'hilippinesB dire economic conditions, #ony "nternational #ingaporehanded #ony 'hilippines a dole-out to answer for the expenses payable to theadvertising companies. #ony 'hilippines was thereafter assessed deficiency VAT forthe transaction, i.e., dole-out, between #ony "nternational #ingapore and #ony'hilippines. The #upreme ourt ruled that the dole-out or subsidy from the

(ingaporean company to the )hilippine company neither constituted a sale ofgoods or properties, nor a sale of services . 5ence, #ony 'hilippines was not liableto pay VAT on the same.

C "8 v. #ony 'hilippines, "nc., &8 @o. 1K=>GK, 1K @ov. 010.D

106(A)(*) +ero-,ated Sales of Goods

(1! he following sales b& VAT-re istered persons s%all be sub"e#t to ero per#ent (0 )rate 3 (a!

Export Sales. - he term export sales means3

(#! he sale and actual shipment of goods from the hilippines to a foreign country,irrespective of any shipping arrangement that may be agreed upon which may influence ordetermine the transfer of ownership of the goods so exported and paid for in acceptableforeign currency or its e0uivalent in goods or services, and accounted for in accordance withthe rules and regulations of the /ang o "entral ng ilipinas (/" !4

(1! "ale of raw materials or pac aging materials to a nonresident buyer for delivery to aresident local export-oriented enterprise to be used in manufacturing, processing, pac ing orrepac ing in the hilippines of the said buyer s goods and paid for in acceptable foreigncurrency and accounted for in accordance with the rules and regulations of the /ang o "entralng ilipinas (/" !4

(5! "ale of raw materials or pac aging materials to export-oriented enterprise whose exportsales exceed seventy percent (+$2! of total annual production4

(6! "ale of gold to the /ang o "entral ng ilipinas (/" !4 and

(7! hose considered export sales under 8xecutive 9rder *9. 11%, otherwise nown as the9mnibus :nvestment 'ode of #;&+, and other special laws.

Q4 DISTINGUISH =ETWEEN VAT RATING AND

ERO -RATING .

* The case of CIR v. 4eng+et Co po ation explained VAT rating vis-as-vis 6ero-ratingin principle, as well as by way of illustration, to wit$

• I t a )a*ti% ) taxe$ at a 1 ate 9VAT ati !: , when at the end of any giventaxable uarter the output VAT exceeds the input VAT, the excess shall be paid

to the governmentM when the input VAT exceeds the output VAT, the excesswould be carried over to VAT liabilities for the succeeding uarter or uarters.



• ?n the other hand, t a )a*ti% ) 3hi*h a e taxe$ at 2e %- ate do not result inany output tax. "nput VAT attributable to 6ero-rated sales could be refunded orcredited against other internal revenue taxes at the option of the taxpayer.

To illustrate, i a 2e %- ate$ t a )a*ti% + when a VAT-registered person % taxpayer2(purchases materials from his supplier at '

=0.00, 'K.)0 of which was passed on tohim by his supplier as the latterBs 10! output VAT, the tax,a&e i) a""%3e$ t%

e*%'e P8. 7 / %# the =IR , in addition to other input VAT he had incurred inrelation to the 6ero-rated transaction, th %(!h tax * e$it) % e/( $) .

3hen the taxpayer sells his finished product in a 6ero-rated transaction, say, for'110.00, he is not re uired to pay any output VAT thereon. I the *a)e %/ at a )a*ti% )(b e*t t% 7 VAT+ the taxpayer is allowed to recover both the inputVAT of 'K.)0 which he paid to his supplier and his output VAT of ' .K0 %10! the')0.00 value he has added to the '

=0.00 material( by passing on both costs to thebuyer. Thus, the buyer pays the total 10! VAT cost, in this case '10.00 on theproduct.

C "8 v. 7enguet orporation, &8 @os. 1)+<=K O 1)+<==, = Euly 00<.D

Q4 DISTINGUISH =ETWEEN VAT EXE>PTION AND ERO -RATING .

The case of Conte* Co po ation v. CIR enumerated two ways by which a transactioncould have preferential treatment under the VAT system, namely$ %1( VAT exemptionMand % ( 6ero-rating.

Nxemptions from VAT are granted by express provision of the Tax ode or speciallaws. /nder VAT, the transaction can have preferential treatment in the followingways$

Vat Exe#, t Sa"e) 9Vat-Exe#,t : e % Rate$ Sa"e) 9 e % Rat i !:

#imply put, the VAT is removed at theexempt stage %e.g. point of the sale,barter, etc(

These are sales by VAT-registeredpersons which are sub ect to 0! rate,meaning the tax burden is not passed onto the purchaser.

A 6ero-rated sale or transaction by aVAT-registered person, which is ataxable transaction for VAT purposes,$%e) %t e)("t i a & %(t,(t tax %still ata*a#le t ansaction)

A VAT-8egistered purchaser of VAT-exempt goods4properties4services whichare exempt from VAT i) %t e tit"e$ t%a & i ,(t tax % )(*h ,( *ha)e .

The i ,(t VAT on the purchases of aVAT-registered person with 6ero-ratedsales may be a""%3e$ as tax * e$it) orrefunded

The seller of exempt goods properties orservices )ha"" %t bi"" a & %(t,(t tax .Nxemption only removes the VAT at theexempt stage, and it 3i"" a*t(a""&i * ea)e+ athe tha e$(*e the t%ta"taxe) ,ai$ b& the exe#,t /i # )b()i e)) % % - etai" *()t%#e ).

The e i) % "& ,a tia" e"ie/ be*a()e the,( *ha)e i) %t a""%3e$ a & taxe/( $ % * e$it /% i ,(t taxe) ,ai$.

/nder 6ero-rating, all VAT is removedfrom the 6ero-rated goods, activity or firm

C"nD 6ero rating, there is total elie for thepurchaser from the burden of the tax

Q4 Di)ti !(i)h bet3ee 2e %- ate$ t a )a*ti% ) a $ e//e*ti'e"& 2e %- ate$t a )a*ti% ).

The case of CIR v. Seagate Technology (Philippines) addressed this issue. "t statedthat the difference is primarily as to their source.

;ero-8ated Nffectively ;ero-8atede %- ate$ t a )a*ti% ) generally refer

to the export sale of goods and supply ofservices.

The tax rate is set at 6ero.

3hen applied to the tax base, such rateobviously results in no tax chargeableagainst the purchaser.

The seller of such transactions chargesno output tax, but can claim a refund ofor a tax credit certificate for the VATpreviously charged by suppliers

E//e*ti'e"& 2e %- ate$ t a )a*ti% ) efer to the sale of goods or supply of

services to persons or entities whoseexemption under special laws orinternational agreements to which the'hilippines is a signatory effectivelysub ects such transactions to a 6ero rate.

Again, as applied to the tax base, suchrate does not yield any tax chargeableagainst the purchaser.

The seller who charges 6ero output taxon such transactions can also claim arefund of or a tax credit certificate for the

VAT previously charged by suppliers.2

Applying the estination p inciple to theexportation of goods, a(t%#ati* 2e %

ati ! is primarily intended to be en oyedby the seller who is directly and legallyliable for the VAT, maFing such sellerinternationally competitive by allowing therefund or credit of input taxes that areattributable to export sales.

E//e*ti'e 2e % ati ! , on the contrary, isintended to benefit the purchaser who,not being directly and legally liable for thepayment of the VAT, will ultimately bearthe burden of the tax shifted by thesuppliers

106(A)(*)(a) Export Sales

Q4 What i) the * %))-b% $e $%*t i e?



* According to CIR v. Toshi#a In o 'ation 6:+ip'ent (Phils.), Inc. , the 'hilippinesadheres to the cross-border doctrine which means that no &T shall be imposed toform part of the cost of goods destined for consumption outside of theterritorial border of the taxing authority .

5ence$

• actual export of goods and services from the 'hilippines to a foreign countrymust be free of VATM

•

?n the other hand, those destined for use or consumption within the 'hilippinesshall be imposed with ten percent %10!( Cnow 1 !D VAT.• Additionally, sales made by an enterprise within a non-N ?;?@N territory, i.e.,

ustoms Territory, to an enterprise within an N ?;?@N territory shall be free ofVAT.

C "8 v. Toshiba "nformation N uipment %'hils.(, "nc., &8 @o. 1<01<+, G Aug. 00<.D

//106(A)(*)(a)(1) A#tual S%ip'ent of Goods fro' t%e P%ilippinesto a orei n Countr& (+,T ) he sale and actual shipment of goods from the

hilippines to a foreign country, irrespective of any shipping arrangement that may be agreedupon which may influence or determine the t ransfer of ownership of the goods so exported and

paid for in acceptable foreign currency or its e0uivalent in goods or services, and accountedfor in accordance with the rules and regulations of the /ang o "entral ng ilipinas (/" !<<

Q4 Gi'e exa#,"e) %/ ex,% t )a"e) i the /% # %/ a*t(a" )hi,#e t %/ !%%$) / %#the Phi"i,,i e) t% a /% ei! *%( t &.

* Toshi#a In o 'ation 6:+ip'ent (Phils.), Inc. v. CIR is a claim for tax refund4credit ofalleged unutili6ed input VAT on local purchases of goods and services which areattributable to export sales for the first and second uarters of 1GGK. C@?TN$ This isdifferent from the Toshiba ase previously cited.D

"n the case at bar, the CIR , in the Eoint #tipulation of acts and "ssues, a$#itte$ thatT%)hiba 3a) a e!i)te e$ VAT e tit& a $ that it 3a) )(b e*t t% 7 VAT % it)ex,% t )a"e) . Jater, in his Iotion for 8econsideration of the adverse ourt of Tax

Appeals decision, the CIR 3%("$ a !(e that T%)hiba 3a) %t e tit"e$ t% it) *"ai#/% tax e/( $6* e$it be*a()e it 3a) VAT-exe#,t and its export sales were VAT-exe#,t t a )a*ti% ) (CIR a g+e this ;ay #eca+se i the e*po t sales ;e e /0Te*e'pt, then it ;o+l #e entitle to clai' any c e it o' inp+t ta*)

The #upreme ourt ruled that Toshiba was a registered VAT entity and its exportsales were sub ect to 0! VAT.

N%te$ 8emember, a 6ero-rated sale by a VAT-registered person, which is a taxabletransaction for VAT purposes, shall not result in any output tax. 5owever, the inputtax on his purchases of goods, properties or services related to such 6ero-rated saleshall be available as tax credit or refund in accordance with these regulations

CToshiba "nformation N uipment %'hils.(, "nc. v. "8, &8 @o. 1<K<G+, G Iar. 010.D

The case of Intel Technology Philippines, Inc. v. CIR is a claim for tax refund4credit ofalleged unutili6ed input VAT on local purchases of goods and services which areattributable to export sales for the second uarter of 1GG=.

• To prove that it was engaged in the sale and actual shipment of goods from the'hilippines to a foreign country and therefore entitled to tax credit of input VAT,"ntel Technology presented documentary evidence such as )(##a & %/ ex,% t)a"e)+ )a"e) i '%i*e)+ %//i*ia" e*ei,t)+ ai 3a& bi"")+ a $ ex,% t $e*"a ati% ) .

• And, to prove that payment was made in acceptable foreign currency or its

e uivalent in goods or services, and accounted for in accordance with the rulesand regulations of the 4ang<o Sent al ng Pilipinas %7#'(,2 a *e ti/i*ati% %/i 3a $ e#itta *e) was presented by "ntel Technology

• The #upreme ourt found that "ntel TechnologyBs evidence sufficientlyestablished that it was engaged in export sales.

N%te$4ase on Sec 1%!, e*po t sales, o sales o+tsi e the Philippines, a e s+#=ect to/0T at %> ate i 'a e #y a /0T? egiste e pe son. @hen applie to the ta* #ase,the %> ate o#vio+sly es+lts in no ta* cha gea#le against the p+ chase . The selleo s+ch t ansactions cha ges no o+tp+t ta*, #+t can clai' a e +n o ta* c e itce ti icate o the /0T p evio+sly cha ge #y s+pplie s.

Additionally, /nder #ections 10> %A(% (%a(%1( in relation to 11 %A( of the Tax ode, ataxpayer engaged in 6ero-rated or effectively 6ero-rated transactions may apply for arefund or issuance of a tax credit certificate for input taxes paid attributable to suchsales upon complying with the following re uisites$ %1( the taxpayer is engaged insales which are 6ero-rated %liFe export sales( or effectively 6ero-ratedM % ( thetaxpayer is VAT-registeredM %)( the claim must be filed within two years after the closeof the taxable uarter when such sales were madeM %+( the creditable input tax due orpaid must be attributable to such sales, except the transitional input tax, to the extentthat such input tax has not been applied against the output taxM and %<( in case of6ero-rated sales under #ection 10>%A(% (%a(%1( and % (, #ection 10>%7(, and #ection10=%7(%1( and % (, the acceptable foreign currency exchange proceeds thereof hadbeen duly accounted for in accordance with 7#' rules and regulations. "t is addedthat, Lwhere the taxpayer is engaged in 6ero-rated or effectively 6ero-rated sale andalso in taxable or exempt sale of goods or properties or services, and the amount ofcreditable input tax due or paid cannot be directly or entirely attributed to any one ofthe transactions, it shall be allocated proportionately on the basis of the volume of thesales

C"ntel Technology 'hilippines, "nc. v. "8, &8 @o. 1>>K) , K Apr. 00K.D

106(A)(*)(a)(*) Sale of ,a$ 2aterials to a 3onresident 4u&er foreli er& to a ,esident Lo#al Export-7riented Enterprise "ale of raw

materials or pac aging materials to a nonresident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, pac ing or repac ing in the

hilippines of the said buyer s goods and paid for in acceptable foreign currency andaccounted for in accordance with the rules and regulations of the /ang o "entral ng ilipinas(/" !4

106(A)(*)(a)(8) Sale of ,a$ 2aterials to Export-7riented



Enterprise "ale of raw materials or pac aging materials to export-oriented enterprisewhose export sales exceed seventy percent (+$2! of total annual production4

Q4 Gi'e a exa#,"e %/ a )a"e %/ a3 #ate ia") t% a ex,% t-% ie te$ e te , i)e.

* #ection 10>%A(% (%a(%)( of the 1GGK Tax ode pertains to the sale of raw materialsor pacFaging materials to an export-oriented enterprise 3h%)e ex,% t )a"e) ex*ee$87 %/ t%ta" a (a" , %$(*ti% . 3ith respect to the extent of the relief, the #upreme

ourt held that$

Thus, the 7 ate a,,"ie) t% the t%ta" )a"e %/ a3 #ate ia") % ,a*Ba!i !#ate ia") t% a ex,% t-% ie te$ e te , i)e and not ()t the percentage of the salein proportion to the actual exports of the enterprise.2CAtlas onsolidated Iining and Hevelopment orporation v. "8, &8 @o. 1+> 1, <#ept. 00K.D

106(A)(*)(a)(9) Sale of Gold to t%e 4SP

Q4 Gi'e a exa#,"e %/ a )a"e %/ !%"$ t% the =SP.

CIR v. 4eng+et Co po ation is a claim for tax refund4credit of alleged unutili6ed inputVAT on 7enguet orporationBs sale of gold to the 4ang<o Sent al ng Pilipinas for theperiod 1 August 1G=G to )1 Euly 1GG1. C@?TN$ At the time the sub ect transaction wasmade, the treatment of sale of gold to the 7#' as export sales was merely based on7"8 issuances. Today, such treatment is already contained in the 1GGK Tax ode.DC "8 v. 7enguet orporation, &8 @os. 1)+<=K O 1)+<==, = Euly 00<.D

106(A)(*)(a)(5) Export Sales under t%e 7'nibus :n est'ent Codeof 1;<= and 7t%er Spe#ial La$s

Q4 Gi'e a exa#,"e %/ ex,% t )a"e) ( $e the O# ib() I 'e)t#e t C%$e %/8 a $ %the ),e*ia" "a3) .

"n Panasonic Co''+nications I'aging Co po ation o the Philippines v. CIR ,

'anasonic produced and exported paper copiers and their sub-assemblies, parts, andcomponents. "t was registered with the 7oard of "nvestments as a preferred pioneerenterprise under the ?mnibus "nvestment ode of 1G=KM it was a registered VATenterpriseM and its export sales were 2e %- ate$.

C'anasonic ommunications "maging orporation of the 'hilippines v. "8, &8 @o.1K=0G0, = eb. 010.D

106(A)(*)(a)(6) Sale of Goods to Persons En a ed in :nternationalS%ippin or Air Transport 7perations

106(A)(*)(b) orei n Curren#& eno'inated Sale he phrase foreign

currency denominated sale means sale to a nonresident of goods, except those mentionedin "ections #6; and #7$, assembled or manufactured in the hilippines for delivery to a

resident in the hilippines, paid for in acceptable foreign currency and accounted for inaccordance with the rules and regulations of the /ang o "entral ng ilipinas (/" !.

106(A)(*)(#) +ero-,ated Sales pursuant to Spe#ial La$s or:nternational A ree'ents

106(4) Transa#tions ee'ed Sale

106(4)(1) Transfer 3ot in t%e Course of Trade or 4usiness ofGoods>Ser i#es 7ri inall& :ntended for Sale>?se in t%e Course ofTrade or 4usiness

106(4)(*) 7t%er Transa#tions

hese are3(#! transfer to shareholders=investors as share in the profits of a VA -registered person=entity4(1! transfer to creditors in payment of debt4(5! consignment of goods, if actual sale is not made within %$ days following the date suchgoods were consigned4 and

(6! retirement from or cessation of business, with respect to inventories of taxable goodsexisting as of such retirement or cessation.

Q4 Gi'e a exa#,"e %/ a t a )a*ti% $ee#e$ )a"e ( $e thi) , %'i)i% .

* "n San Ro:+e Po;e Co po ation v. CIR , #an 8o ue 'ower orporation wasengaged in the )(,,"& %/ e"e*t i*it& t% the Nati% a" P%3e C% ,% ati% . #uch saleof service ualified as a 6ero-rated transaction under #ection 10=%7(%)( of the 1GGKTax ode.

A portion of #8' Bs claim for tax refund4credit for alleged unutili6ed input VAT wasatt ib(tab"e t% a )a"e@ %/ e"e*t i*it& t% NPC that 3a) #a$e $( i ! the te)ti !,e i%$ )%#eti#e i 1771 , for which #8' was paid an amount of 'hp + .< million.

The issue was whether such sale2 ualified for 6ero-rating. The #upreme ourt heldthat although the sale2 was not a commercial sale or in the normal course ofbusiness, it was a transaction deemed sale2 under #ection 10>%7(%1( of the 1GGK Tax

ode. "t thus ualified for 6ero-rating.C#an 8o ue 'ower orporation v. "8, &8 @o. 1=0)+<, < @ov. 00G.D

7 9C: Cha !e) i % Ce))ati% %/ Stat() %/ a VAT-Re!i)te e$ Pe )%

7 9D: Sa"e) Ret( )+ A""%3a *e)+ a $ Sa"e) Di)*%( t)

7 9E: A(th% it& %/ the C%##i))i% e t% Dete #i e the A,, %, iate Tax =a)e

(ec. + , alue-&dded Tax on #mportation of Goods



C "8 v. American Nxpress "nternational, "nc. %'hilippine 7ranch(, &8 @o.1< >0G, G Eune 00<.D

7 9=:9 : P %*e))i !+ >a (/a*t( i !+ % Re,a*Bi ! G%%$) /% Othe Pe )% )D%i ! =()i e)) %(t)i$e the Phi"i,,i e)

7 9=:91: Se 'i*e) Othe tha Th%)e >e ti% e$ i the P e*e$i ! Pa a! a,h

P$ ite examples of services other than processing, manufacturing, or repacFing ofgoods.2

* "n CIR v. 0'e ican 6*p ess Inte national, Inc. , Amex 'hils. facilitated in the'hilippines the collection and payment of receivables belonging to its 5ongQong-based foreign client, Amex 5Q, and getting paid for it in acceptableforeign currency and accounted for in accordance with the rules andregulations of the 7#'. The #upreme ourt ruled that the facilitation services

Amex 'hils. rendered in the 'hilippines fell under #ection 10=%7(% ( of the1GGK Tax ode.C "8 v. American Nxpress "nternational, "nc., &8 @o. 1< >0G, G Eune 00<.D

** "n CIR v. Place 9o'e Technical Se vices (Phils.) Inc. , 'lacer Homeanada engaged the services of 'lacer Home 'hils. to perform the clean-upand rehabilitation of the IaFalupnit and 7oac 8ivers in Iarindu ue. 'lacerHome 'hils. argued that its sale of services to 'lacer Home anada was a6ero-rated transaction under #ection 10=%7(% ( of the 1GGK Tax ode. itingCIR v. 0'e ican 6*p ess Inte national, Inc. , the #upreme ourt upheld 'lacerHome 'hils.B argument.

C "8 v. 'lacer Home Technical #ervices %'hilippines(, "nc., &8 @o. 1>+)><, =Eune 00K.D

*** "nCIR v. 4+ 'eiste an @ain Scan inavian Cont acto 7in anao, Inc. ,7urmeister was engaged in the actual operation and management of twopower barges in Iindanao. "t claimed that its transactions were sub ect to6ero-rating under #ection 10=%7(% ( of the 1GGK Tax ode. The #upreme

ourt denied 7urmeisterBs claim on the ground that #ection 10=%7(% ( of the1GGK Tax ode additionally re uired that the payer-recipient of the servicesmust be doing business outside the 'hilippines. "t ruled in this manner$

The Tax ode not only re uires that the services be other than Rprocessing,manufacturing or repacFing of goodsB and that payment for such services be inacceptable foreign currency accounted for in accordance with 7#'rules. Another essential condition for ualification to 6ero-rating under #ection10 %b(% ( is that the e*i,ie t %/ )(*h )e 'i*e) i) $%i ! b()i e)) outsidethe Phi"i,,i e). 3hile this re uirement is not expressly stated in the secondparagraph of #ection 10 %b(, this is clearly provided in the first paragraph of

#ection 10 %b( where the listed services must be J/% %the ,e )% ) $%i !b()i e)) %(t)i$e the Phi"i,,i e). The phrase for other persons doingbusiness outside the 'hilippines2 not only refers to the services enumerated inthe first paragraph of #ection 10 %b(, but also pertains to the general term

services2 appearing in the second paragraph of #ection 10 %b(. "n short,services other than processing, manufacturing, or repacFing of goods mustliFewise be performed for persons doing business outside the 'hilippines.2

C@?TN$ "n relation to CIR v. 0'e ican 6*p ess Inte national, Inc. and CIR v.

Place 9o'e Technical Se vices (Philippines), Inc. discussed above, saidcases stated that *% )(#,ti% %/ the )e 'i*e) ab %a$ i) %t a e0(i e#e t/% 2e %- ati !. 5owever, on the basis of CIR v. 4+ 'eiste @ainCont acto 7in anao, Inc. , the ,a&e - e*i,ie t %/ the )e 'i*e) #()t be$%i ! b()i e)) %(t)i$e %/ the Phi"i,,i e). D

C "8 v. 7urmeister O 3ain #candinavian ontractor Iindanao, "nc., &8 @o.1<) 0<, Ean. 00K.D

7 9=:9 : e %-Rate$ Sa"e) ,( )(a t t% S,e*ia" La3) % I te ati% a"A! ee#e t)

P$ Histinguish between 6ero-rated transactions Ce.g., #ec. 10=%7(%1(-% (D andeffectively 6ero-rated transactions Ce.g., #ec. 10=%7(%)(D.

* The case of CIR v. Seagate Technology (Philippines) addressed this issue. "tstated that$

Although both are taxable and similar in effect, 6ero-rated transactions differfrom effectively 6ero-rated transactions a) t% thei )%( *e .

e %- ate$ t a )a*ti% ) generally refer to the export sale of goods andsupply of services. The tax rate is set at 6ero. 3hen applied to the tax base,such rate obviously results in no tax chargeable against the purchaser. Theseller of such transactions charges no output tax, but can claim a refund of ora tax credit certificate for the VAT previously charged by suppliers.

E//e*ti'e"& 2e %- ate$ t a )a*ti% )+ however, refer to the sale of goods orsupply of services to persons or entities whose exemption under special lawsor international agreements to which the 'hilippines is a signatory effectivelysub ects such transactions to a 6ero rate. Again, as applied to the tax base,such rate does not yield any tax chargeable against the purchaser. The sellerwho charges 6ero output tax on such transactions can also claim a refund of ora tax credit certificate for the VAT previously charged by suppliers.2The decision went on to say %under the subheading ;ero 8ating andNxemption($

Applying the estination p inciple to the exportation of goods, a(t%#ati* 2e %ati ! is primarily intended to be en oyed by the seller who is directly and

legally liable for the VAT, maFing such seller internationally competitive byallowing the refund or credit of input taxes that are attributable to export sales.

E//e*ti'e 2e % ati ! , on the contrary, is intended to benefit the purchaserwho, not being directly and legally liable for the payment of the VAT, will



ultimately bear the burden of the tax shifted by the suppliers.2 %Nmphasissupplied.(C "8 v. #eagate Technology %'hilippines(, &8 @o. 1<)=>>, 11 eb. 00<.D

P$ &ive examples of effectively 6ero-rated sales of services pursuant to special laws.

* "n CIR v. 0cesite (Philippines) Botel Co po ation , Acesite was the operator of5oliday "nn Ianila 'avilion 5otel. "t leased a portion of its premises to'A& ?8 for casino operations. "t also catered food and beverages to'A& ?8Bs casino patrons. The issue was whether Acesite could refund theVAT it paid on its rental income and sale of food and beverages to 'A& ?8.The #upreme ourt, pursuant to 'A& ?8Bs charter %'H @o. 1=>G and allamendments thereto(, found that AcesiteBs sale of services to 'A& ?8 was6ero-rated under #ection 10=%7(%)( of the 1GGK Tax ode.C "8 v. Acesite %'hilippines( 5otel orporation, &8 @o. 1+K G<, 1> eb.

00K.D

** "n the case of San Ro:+e Po;e Co po ation v. CIR , #an 8o ue 'owerorporation was engaged in the sale of electricity to @' . The #upreme ourt

ruled that #8' Bs sale of service to @' was 6ero-rated, pursuant to @' Bscharter and under #ection 10=%7(%)( of the 1GGK Tax ode. "t explained therationale for the effective 6ero-rating of @' in this manner$

"t bears emphasis that effective 6ero-rating is not intended as a benefit to the

person legally liable to pay the tax, such as petitioner, but to relieve certainexempt entities, such as the @' , from the burden of indirect tax so as toencourage the development of particular industries. 7efore, as well as after,the adoption of the VAT, certain special laws were enacted for the benefit ofvarious entities and international agreements were entered into by the'hilippines with foreign governments and institutions exempting sale of goodsor supply of services from indirect taxes at the level of their suppliers. Nffective6ero-rating was intended to relieve the exempt entity from being burdened withthe indirect tax which is or which will be shifted to it had there been noexemption. "n this case, petitioner is being exempted from paying VAT on itspurchases to relieve @' of the burden of additional costs that petitioner mayshift to @' by adding to the cost of the electricity sold to t he latter.2C#an 8o ue 'ower orporation v. "8, &8 @o. 1=0)+<, < @ov. 00G.D

7 9=:9K: Sa"e %/ Se 'i*e) t% Pe )% ) E !a!e$ i I te ati% a" Shi,,i ! % AiT a ),% t O,e ati% )

7 9=:9<: Sa"e %/ Se 'i*e) /% Ex,% t-O ie te$ E te , i)e

7 9=:9 : T a ),% t %/ Pa))e !e ) a $ Ca !% b& Ai % Sea" Ve))e") / %# thePhi"i,,i e) t% a F% ei! C%( t &

7 9=:98: Sa"e %/ P%3e Ge e ate$ th %(!h Re e3ab"e S%( *e) %/ E e !&

(ec. + 1, 2xempt Transactions

P$ Histinguish between an exempt transaction and an exempt party.

* CIR v. Seagate Technology (Philippines) made a distinction between exempt

transaction exempt party in this wise$D An exempt transaction + on the one hand, involves goods or services which,by their nature, are specifically listed in and expressly exempted from the VATunder the Tax ode, without regard to the tax status -- VAT-exempt or not -- ofthe party to the t ansaction. "ndeed, such transaction is not sub ect to the VAT,but the seller is not allowed any tax refund of or credit for any input taxes paid.

An exempt party , on the other hand, is a person or entity granted VATexemption under the Tax ode, a special law or an international agreement towhich the 'hilippines is a signatory, and by virtue of which its taxabletransactions become exempt from the VAT. #uch pa ty is also not sub ect tothe VAT, but may be allowed a tax refund of or credit for input taxes paid,depending on its registration as a VAT or non-VAT taxpayer.2 %Nmphasissupplied.(

C "8 v. #eagate Technology %'hilippines(, &8 @o. 1<)=>>, 11 eb. 00<.D

P$ &ive examples of exempt transactions.

7 9A: Sa"e % I#,% tati% %/ A! i*("t( a" a $ >a i e F%%$ P %$(*t) i TheiO i!i a" State

* 7isa'is 8 iental 0ssociation o Coco T a e s, Inc. v. 98" interpreted the

provisions of the 88 Tax ode. 5owever, it is instructive as to the issue ofwho determines or classifies a certain product, i.e., whether it is food or non-food. According to the decision, as between the 7ureau of ood and Hrug andthe 7ureau of "nternal 8evenue, the classification made by the latter wouldprevail.CIisamis ?riental Association of oco Traders, "nc. v. H? , &8 @o. 10=< +,10 @ov. 1GG+.D

7 9G: >e$i*a"+ De ta"+ H%),ita"+ a $ Vete i a & Se 'i*e)+ ex*e,t Th%)eRe $e e$ b& P %/e))i% a")

* #ection 10G%&( of the Tax ode provides that transactions involving medical,dental, hospital, and veterinary services are VAT-exempt transactions. "n thecase of CIR v. Philippine Bealth Ca e P ovi e s, Inc. , it was found that'hilippine 5ealth are 'roviders, "nc. did not render medical, dental, hospital,and veterinary services, but merely arranged for the same. 5ence, its serviceswere not VAT-exempt.C "8 v. 'hilippine 5ealth are 'roviders, "nc., &8 @o. 1>=1 G, + Apr. 00K.D

7 9I: Se 'i*e) Re $e e$ b& I $i'i$(a") ,( )(a t t% a E#,"%&e -E#,"%&eeRe"ati% )hi,

* Son a v. 04S?C4N 4 oa casting Co po ation differentiated betweenservices rendered pursuant to an employer-employee relationship %which is anexempt transaction( and services rendered by an independent contractorpursuant to a contractual relationship %which is sub ect to VAT(. The #upreme

ourt ruled that #on6a was an independent contractor. As such, he was

sub ect to VAT on the services that he rendered.C#on6a v. A7#- 7@ 7roadcasting orporation, &8 @o.1)=0<1, 10 Eune



E//e*ti'e 2e % ati ! , on the contrary, is intended to benefit the purchaserwho, not being directly and legally liable for the payment of the VAT, willultimately bear the burden of the tax shifted by the suppliers.2 %Nmphasissupplied.(C "8 v. #eagate Technology %'hilippines(, &8 @o. 1<)=>>, 11 eb. 00<.D

P$ 3hat are the re uirements for a claim for VAT refund4credit

* The cases of Intel Technology Philippines, Inc. v. CIR and San Ro:+e Po;eCo po ation v CIR enumerated the re uirements, thus$%1( the taxpayer is engaged in sales which are 6ero-rated or effectively 6ero-ratedM% ( the taxpayer is VAT-registeredM%)( the claim must be filed within two years after the close of the taxable

uarter when such sales were madeM%+( the input taxes are due or paidM%<( the input taxes are not transitional input taxesM%>( the input taxes have not been applied against output taxes during and inthe succeeding uartersM%K( the input taxes claimed are attributable to 6ero-rated or effectively 6ero-rated salesM%=( in certain types of 6ero-rated sales, the acceptable foreign currencyexchange proceeds thereof had been duly accounted for in accordance with

7#' rules and regulations C#ections 10>%A(% (%a(%1( and % (M #ection 10>%7(M#ections 10=%7(%1( and % (DM and%G( where there are both 6ero-rated or effectively 6ero-rated sales and taxableor exempt sales, and the input taxes cannot be directly and entirely attributableto any of these sales, the input taxes shall be proportionately allocated on thebasis of sales volume.C"ntel Technology 'hilippines, "nc. v. "8, &8 @o. 1>>K) , K Apr. 00KM #an8o ue 'ower orporation v. "8, &8 @o. 1=0)+<, < @ov. 00G.D

P$ "n claims for VAT refund4credit, what is the recFoning point for the two-yearprescriptive period

* "n 00K, the #upreme ourt promulgated its decision in 0tlas Consoli ate

7ining an 9evelop'ent Co po ation v. CIR which essentially held that inclaims for VAT refund4credit, the prescriptive period for filing administrativeand udicial claims shall be two years recFoned / %# the $ate %/ /i"i ! %/ theVAT 0(a te "& et( .

A year later, in the highly publici6ed case of CIR v. 7i ant Pag#ilaoCo po ation, the #upreme ourt changed its mind and ruled that the two-yearprescriptive period in claims for VAT refund4credit must be counted not fromthe date of filing of the VAT uarterly return, but / %# the *"%)e %/ thetaxab"e 0(a te 3he the e"e'a t )a"e) 3e e #a$e. CAtlas onsolidated Iining and Hevelopment orporation v. "8, &8 @os.1+110+ O 1+=K>), = Eune 00KM "8 v. Iirant 'agbilao orporation, &8 @o.1K 1 G, 1 #ept. 00=.D

19=: Ca *e""ati% %/ VAT Re!i)t ati%

19C: Pe i%$ 3ithi 3hi*h Re/( $ % Tax C e$it %/ I ,(t Taxe) Sha"" =e >a$e

P$ 3hen are administrative and udicial claims for VAT refund4credit filed

* "n 00K, the #upreme ourt promulgated its decision in 0tlas Consoli ate7ining an 9evelop'ent Co po ation v. CIR which essentially held that claimsfor VAT refund4credit must be filed within the two-year prescriptive period."n 010, the #upreme ourt came out with the controversial case of CIR v.

0ichi "o ging Co'pany o 0sia, Inc. which mandated compliance ofadministrative and udicial claims with b%th the two-year prescriptive periodC#ection 11 %A(Da $ the 1 0-)0 day period rule C#ection 11 % (D. ?therwise,claims would be ad udged as either filed out of time or prematurely filed. CAtlas onsolidated Iining and Hevelopment orporation v. "8, &8 @os.1+110+ O 1+=K>), = Eune 00KM "8 v. Aichi orging ompany of Asia, "nc.,&8 @o. 1=+= ), > ?ct. 010.D

19D: >a e %/ Gi'i ! Re/( $

(ec. ++5, #nvoicing and &ccounting $e6uirements for &T-$egistered )ersons

9A: I '%i*i ! Re0(i e#e t)

P$ "s there a difference between an invoice and an official receipt

* CIR v. 7anila 7ining Co po ation defined these terms, to wit$A Bsales or commercial invoiceB is a written account of goods sold or services

rendered indicating the prices charged therefor or a list by whatever name it isFnown which is used in the ordinary course of business evidencing sale andtransfer or agreement to sell or transfer goods and services.

A RreceiptB on the other hand is a written acFnowledgment of the fact ofpayment in money or other settlement between seller and buyer of goods,debtor or creditor, or person rendering services and client or customer.2C "8 v. Ianila Iining orporation, &8 @o. 1<) 0+, )1 Aug. 00<.D

** "n 0T T Co''+nications Se vices Philippines, Inc. v. CIR , ATOT wasengaged in the business of providing information, promotional, supportive, andliaison services to foreign corporations. "t filed a claim for tax refund4credit for

alleged unutili6ed input VAT on said sales of services and presented salesinvoices to substantiate the same. "n giving credence to the sales invoices %notnecessarily official receipts(, the #upreme ourt said that$

#ales invoices are recogni6ed commercial documents to facilitate trade orcredit transactions. They are proofs that a business transaction has beenconcluded, hence, should not be considered bereft of probative value. ?nly thepreponderance of evidence threshold as applied in ordinary civil cases isneeded to substantiate a claim for tax refund proper.2CATOT ommunications #ervices 'hilippines, "nc. v. "8, &8 @o. 1= )>+, )

Aug. 010.D

*** ?n other hand, the case of Eepco Philippines Co po ation v. CIR made adistinction between a VAT invoice and a VAT receipt, such that only a VATinvoice might be presented to substantiate a sale of goods or properties, whileonly a VAT receipt could substantiate a sale of services. 'ertinent portion ofthe decision read$

value added tax notes

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