BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 41 Chapter 8: BUSINESS TRANSACTIONS CHAPTER BUSINESS TRANSACTIONS Problem 8–1 10 False – Some business transactions are VAT-exempt True True True True True False – Zero rated sales are applicable only to VAT-registered business/person True True False – Sales of non-VAT person, exceeding P1,500,000 per year is also subject to VAT Problem 8–2 True False – The exemption pertains only to Output VAT False – Zero VAT transactions are not applicable for non-VAT registered persons False – Some VAT taxable transactions have no Input VAT especially if the supplier is a nonVAT person False – Exempt from business tax because it is considered as a subsistence livelihood True False – Exempt from VAT False – zero VAT False – VAT-exempt 10 True Problem – B D C B C A C C Problem 8-4 B B A B C A C B Problem – C Domestic sales Importation of goods Total VAT taxable transactions Problem – C Output VAT from collections (P4,480,000/9.3333) Input VAT from supplies used (P560,000/9.3333) VAT payable Problem – D No zero-rated transactions because the taxpayer is non-VAT P2,000,000 500,000 P2,500,000 P480.000 60,000 P420,000 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 42 Chapter 8: BUSINESS TRANSACTIONS Problem – C Output VAT (P2,000,000 + P12,000,000) x 12% P1,680,000 The output VAT is the net VAT payable because the business is non-VAT, hence, no input VAT is allowed Problem – A Passenger by sea Cargo by land Cargo by sea Total VAT taxable transactions Problem – 10 C Domestic sales Importation of goods VAT taxable transactions Problem – 11 Export sales 1,500,000 500,000 500,000 P2,500,000 P 500,000 100,000 P 600,000 C P1,000,000 Problem – 12 Output VAT (P134,400/9.3333) Input VAT (P112,000/9.3333) Business tax liability of X P14,400 (12,000) P 2,400 Percentage tax (P112,000/1.12) x 3% P 3,000 Output VAT (P112,000/9.3333) Surcharge (P12,000 x 50%) Business tax liability of Y 12,000 6,000 P21,000 Problem – 13 Sales from: Local government units (P940,000/1.06) University of the Philippines (P564,000/1.06) Department of Tourism (P282,000/1.06) Total sales P886,792 532,075 266,038 P1,684,905 Note: The total withholding per sales was 6% comprising 5% final withholding VAT and 1% creditable withholding income tax Total income tax withheld (P1,684,905 x 1%) P16,849 Total final VAT withheld (P1,684,905 x 5%) P84,245 Problem – 14 VAT-registered Transport of passengers by sea Transport of cargoes by: Land Sea P2,000,000 500,000 1,000,000 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 43 Chapter 8: BUSINESS TRANSACTIONS VAT taxable transactions P3,500,000 Non-VAT registered Transport of passengers by sea Transport of cargoes by: Land Sea VAT taxable transactions P2,000,000 500,000 1,000,000 P3,500,000 Note: The said non-VAT registered business shall now be subject to VAT because its total gross receipts exceed P1,500,000 The gross receipts from transport of passengers, however, shall remain subject to percentage tax Problem – 15 VAT-registered From radio ads From TV ads VAT taxable transactions P 5,000,000 6,000,000 P11,000,000 Non-VAT registered From radio ads From TV ads VAT taxable transactions P 5,000,000 6,000,000 P11,000,000 Note: A non-VAT registered franchise grantees of radio and television broadcasting with annual gross receipts of more than P10,000,000 is subject to VAT Problem – 16 Output VAT – Zero rated because foreign denominated sales Input VAT (P336,000/9.3333) VAT refund P - ( 36,000) (P 36,000) Problem – 17 Domestic sales to various VAT person Domestic sales to various non-VAT person VAT taxable transactions against X P 800,000 600,000 P1,400,000 Problem – 18 P -0 The business is non-VAT and total sales not exceed P1,500,000/year P -0No zero-VAT sale is allowed for a non-VAT business Domestic sales to various VAT persons P 50,000 Domestic sales to various non-VAT persons Export sales denominated in foreign currency Total VAT-exempt sales 100,000 200,000 P350,000 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 44 Chapter 8: BUSINESS TRANSACTIONS Problem – 19 VAT-registered Domestic sales Export sales Total value of sales allowed with creditable Input VAT P 2,000,000 2,000,000 3,000,000 P 5,000,000 Non-VAT registered a Domestic sales – VAT taxable sales b Zero-rated sales c Export sales – VAT-exempt sales of a non-VAT business P 2,000,000 P - - P 3,000,000 .. .BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 42 Chapter 8: BUSINESS TRANSACTIONS Problem – C Output VAT (P2,000,000 + P12,000,000) x 12% P1, 680 ,000... AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 43 Chapter 8: BUSINESS TRANSACTIONS VAT taxable transactions P3,500,000 Non-VAT registered Transport of passengers by. .. VAT-exempt sales 100,000 200,000 P350,000 BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS) SUGGESTED ANSWERS 44 Chapter 8: BUSINESS TRANSACTIONS Problem – 19 VAT-registered