* Value Added Tax is a uniform tax imposed on person, who in the course of trade or business sells, barters, exchanges or leases goods or properties or renders services and on any person who imports goods.

* Who are liable? * Any individual , trust, estate, partnership, corporation, joint venture, cooperative or association who in the course of trade or business:
a. Sells, barters, exchanges goods or properties
b. Sells or renders services
c. Leases properties
4. Importation

* Nature and Characteristics
-VAT is a tax on consumption levied on the sale, barter, exchange or lease of goods or properties and services in the Philippines.
-Seller is the one statutorily liable for the payment of tax but the amount of the tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services.

Business Taxes Abolished by the Introduction of VAT
1. Advance sales tax
2. Compensating tax
3. Sales tax on the original sales
4. Subsequent sales tax
5. Contractor’s tax
6. Broker’s tax
7. Miller’s tax
8. Tax on cinematographic film owner’s, lessors and distributors
9. Excise tax on matches, solvents and video tapes
10. tax on hotel and motel
11. Tax on lending investors
12. Tax on dealer’s in securities
13. Caterer’s tax
14. Tax on insurance premiums on non-life insurance companies (except crop insurance)
15. Franchise tax (except on radio and television broadcasting companies whose annual gross receipts do not exceed P10,000,000, gas and water utilities.

Tax Rate and Tax Base
Rate: 12%
Base: Gross Selling Price – sale of goods Gross receipts – sale of services Total landed cost – importation
Definitions:
1. Vat Payable- the excess of the output tax over the allowable input tax. In case of importation, it is the VAT due on such importation.
2. Output tax – VAT due on the sale of taxable goods or services by any registered or required to register under NIRC. It is also known as OUTPUT VAT
3. Input tax – VAT paid by a VAT registered person in the course of his trade or business on importation of goods or local purchases of goods or services from a VAT registered person. It is also known as INPUT VAT.

VAT on sale of Goods or Properties

Rate and Base: 12% of the Gross Selling Price

Gross Selling Price(GSP) – the total amount of money or its equivalent which the purchaser pays or is obligated to pay to the seller in consideration of the sale, barter or exchange, excluding the value-added tax. The excise tax, if any, on such goods, shall form part of the gross selling price.

Deductions on GSP (GSP shall mean “net sales”)
1. Sales discounts indicated in the invoice the granting of which does not depend upon the happening of a future event.
2. Sales returns when a refund or credit memorandum is issued.

Transactions Deemed Sale
1. Transfer use or consumption not in the course of goods or properties originally intended for sale or for use in the course of trade of business. (Sample: an owner gets his own product for personal consumption)
2. Distribution or transfer to
-Shareholder- as distribution of profit
-creditors-payment of debt
3. Consignment not made within 60 days
4. Retirement or cessation of business

For transaction deemed sale, output tax shall be based on the MV of goods deemed sold at the time o the occurrence of the transactions.