TAXATION
Exercises
Exercie A : Determine whether or not the following are subject to VAT
Transaction VAT-subject?
1. Sale of bread by a bakery
2. Sale of residential lot by a real estate dealer
3. Sale of residential house and lot by the owner who resides in such property
4. Sale of food and drinks by restaurant and other eating places
5. Importation of raw materials for business purpose
6. Importation of computer for personal use
7. Sale of office supplies by a non-profit institution
8. Warehousing services by a government owned or controlled operation
9. Sale of food and drinks in a club operated by a non-profit organization
10. Sale of drinks by Coca-Cola Company
Exercie B Instruction: Place R if the person or entity is required to register as VAT. Otherise place N.
1 VAT-exempt person under Sec 109 who did not register as VAT taxpayer.
2 Individual engaged in business where the gross sales or receipt do not exceed P100,000 during the 12 month period.
3 Non-stock, non profit organization whose gross sales or receipts do not exceed P3,000,000.
4 Multipurpose Cooperatives.
5 Radio and TV broadcasting whose annual sales exceeded P10,000,000.
6 PEZA and other ecozones registered enterprises enjoying preferential rate of 5% in lieu of all taxes.
7 SBMA and other freeport zone registered enterprise enjoying preferential rate of 5% in lieu of all taxes.
Exercie C Instruction: Place Z if the transaction is a subject to a zero percent VAT.
1 Sale of precious metal other than gold to the BSP.
2 Sale of gold to the BSP
3 Sale to export processing zones.
4 Sale of goods or property to SBMA, PEZA, ADB and IRRI
5 Sale of raw material to export oriented BOI-registered enterprise whose export sale exceed 70%.
6 Sale to bonded manufacturing warehouse of export oriented manufacturers.
7 Sale to diplomatic missions and other agencies/instrumentalities granted tax immunities of locally manufactured or assembled
or repacked products Paid in Philippine peso.
8 Sale of fuel to an international shipping which was used in transporting goods from Manila to Japan.
9 Actual exports
10 Retirement of business
Exercise 4: Sales during the year:
Subject to: A B C D
12% P900,000 P1,000,000 P950,000 P1,500,000
0% 1,000,000 1,900,000 950,000 2,000,000
Exempt 4,100,000 2,100,000 3,100,000 1,000,000
Total P6,000,000 P5,000,000 P5,000,000 P4,500,000
Which is/are subject to VAT?
EXERCISES
Exercise A
Instruction: Place E if the transaction is VAT exempt.
1 Sale of meat, fish, vegetables and fruits that have undergone the simple process of preparation or preservation such as
freezing, drying, salting, broiling, roasting, smoking, stripping including advanced technological means of packing (shrink
wrapping in plastics, vacuum packing, tetra-pack and other similar packaging methods).
2 Importation of resettlers of personal and household effects.
3 Growing of poultry, livestock and marine food products into marketable products.
4 Laboratory services and medicines provided by the hospital to the patient.
5 Sale of drugs and medicine by a pharmacy operating in a hospital.
6 Seminars, in service trainings, review classes conducted by the University of the Philippines.
7 Sale of medicine to a senior citizen, person with disability and to students
8 Sale of four adjacent lot with a contract price of P1,000,000 per lot.
9 Sale of parking lot amounting to P900,000.
10 Sale of e-books, e-journals, CDs and software.
11 Transport of goods and cargo by an international carrier.
12 Honorarium given to a director of a company who is at the same time is also a manager of the production department.
13 Services rendered by a regional area headquarters.
14 Importation by non-agricultural, non–electric, and non-credit cooperatives.
Exercise B (Adapted)
Instruction: Determine the VAT-subject and VAT-exempt amounts:
3.2 VAT exempt transactions Page 1 of 7
Selling price: A B C
Condominium unit P1,500,000 P3,500,000 P5,000,000
Parking lot 1, 500,000 800,000 900,000
VAT-subject
Vat-exempt
Exercise C
Instruction: Determine which is VAT-subject and VAT-exempt from sale of adjacent lots A to F.
Lot A Lot B Lot C Lot D Lot E Lot F
Value of the lot P500,000 P700,000 P800,000 P800,000 P1,900,000 P2,000,000
Sold to Buyer A Buyer A Buyer A Buyer 1 Buyer 2 Buyer 3
VAT-subject
VAT-exempt
Exercise D
Instruction: Determine the VAT-subject and VAT-exempt amounts from the rentals of residential units and commercial units.
Residential Commercial
Unit Unit
Case A-Monthly rental per unit (10 residential units and 10 commercial units) P 10,000 P 10,000
Annual gross rentals P1,200,000 P1,200,000
VAT-subject
VAT-exempt
Case B -Monthlyrental per unit (10 residential units and 10 commercial units) P 15,000 P 15,000
Annual gross rentals P1,536,000 P1,536,000
VAT-subject
VAT-exempt
Case C -Monthlyrental per unit (10 residential units and 10 commercial units) P 35,000 P 15,000
Annual gross rentals P1,800,000 P1,800,000
VAT-subject
VAT-exempt
Case D -Monthlyrental per unit (10 residential units and 10 commercial units) P 15,000 P 15,000
Annual gross rentals P4,800,000 P6,800,000
VAT-subject
VAT-exempt
3.2 VAT exempt transactions Page 2 of 7
Exercise E (Adapted)
Instruction: Determine the VAT-subject and VAT-exempt amounts:
Husband Wife
Case A – Gross sales, trading business P3,919,500 P3,000,000
VAT-subject
VAT-exempt
Case B –Gross receipts, practice of profession P1,000,000 P -
Gross receipts, massage parlor 1,200,000
Gross sales, trading business 1,000,000
Gross receipts, gym business 1,500,000 -
Gross sales, RTW and bags business 1,500,000
Gross rentals, monthly rental for leased units, P10,000 1,200,000
Gross sales, pineapple, coconut and vegetables (farm produce) 300,000
Gross sales, Milk fish from own fishpond, marinated and vacuum packed. 1,000,000
Gross receipts, poultry contract grower services 1,300,000
Total
VAT-subject
VAT-exempt
Case C- Gross receipts practice of profession P1,000,000 1,000,000
Salaries 2,000,000 500,000
Tuition fees from family owned vocational school registered under TESDA 5,000,000 5,000,000
Sale of own published books 1,000,000
Total
VAT-subject
VAT-exempt
Exercise F Determine whether or not the VAT can be passed-on and the treatment of the passed-on VAT.
Can pass on VAT? Treatment
1. Sale by a VAT registered seller to a VAT-registered trader
2. Sale by a VAT registered seller to a VAT-exempt trader
3. Sale by a VAT-registered seller to IRRI
4. Sale by a VAT-exempt seller to a VAT-subject trader
3.2 VAT exempt transactions Page 3 of 7
