5 - Ang Tanong! - VAT Zero-Rated Transactions

The Philippine VAT system adheres to this doctrine, according to which, no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority.

(a)  

Zero rated sale is a taxable transaction for VAT purposes, but shall not result in any output tax. However, the input tax on purchases of goods, properties or services, related to such zero-rated sales, shall be available as tax credit or refund in accordance with existing regulations.

• TRUE

• FALSE

The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales exceed seventy percent (70%) of total annual production is automatically under 12% VAT and no longer be considered as export sales subject to 0% VAT upon the implementation of an Enhanced VAT Refund System.

• TRUE

• FALSE

Answer explanation

FALSE. The sale of raw materials or packaging materials to an export-oriented enterprise whose export sales exceed seventy percent (70%) of total annual production shall be under 12% VAT and longer be considered as export sales subject to 0% VAT rate provided that the following conditions are present:

1)Successful establishment of VAT refund system which grants refunds of creditable input tax within ninety (90) days from the filing of the VAT refund application with the Bureau; and

(2) Pending VAT refund claims as of December 31, 2017 shall be fully paid in cash by December 31,2019. (RA 10963)