Concept of Business and Business Taxes
Concept of Business and Business Taxes
Concept of Business and Business Taxes
TAXES
TRANSACTIONS CONSUMMATED IN THE PHILIPPINES
BUSINESS
The place of sale is presumed to be the place of
- trade/commercial activities
consumption.
- related to trade/profession/business
If outside the PH, either 0% VAT, VAT-exempt, or OPT-
- within the PH
exempt.
- not exempt by law
Doctrine of Cross Border – no business tax shall be
Characteristics of Taxable Business Transactions
imposed on products or services destined for
1. Regular Transaction
consumption outside the territorial border of taxing
2. Incidental Transaction
authority
3. Non-Profit/Profit Transaction
4. Within the PH
5. Lawful
LAWFUL TRANSACTIONS
1. Legally registered - non-registration = illegal
2. Not contrary to law, morals, good customs,
REGULAR TRANSACTIONS
public order or public policy
- Habitual, systematic, continuous, regular
income generating activities
- Commercial activities engaged into by dealers
Non-Business Transactions Subject to Business Taxes
Importation of goods/services (gen.)
Sale of Services/Goods by Nonresident Foreign Person
Sale of shares of stock
- In course of business w/o regard to the ”rule of
regularity” Overseas dispatch, communication originating
from the PH
Horse race winning
INCIDENTAL TRANSACTIONS Jai-alai
- Accompanying transactions
1. Sale of scrap materials
2. Sale of ordinary assets other than inventory Economic Activities not Subject to Tax
3. Transactions deemed sales Outside PH – 0% or exempt
a. Personal consumption of inventory by Exempt commercial transactions within
seller-taxpayer Subsistence or livelihood activities –
b. Profit share of inventory unemployed individuals or unlicensed pro
c. Inventory payment to creditors (<100,000 in 12 mos. Period) a.k.a. Marginal
d. Consigned goods not sold in 60 days Income Earners
e. Remaining inventory upon business Privilege stores – tiangges (<15 days)
retirement Casual Sales
Compensation and other benefits from
employment
TRANSACTIONS PURSUED BY PROFIT OR NONDPROFIT
ENTITY
- Exempt from income and business tax if it BUSINESS REGISTRATION
obtained a Certificate of Tax Exemption (3 Nonregistration of business is illegal.
years) Initial registration is in RDO of business. TIN
Annual registration fee of P500 for every separate Sale of house and lot of realtor P3,199,200
establishment must be paid on or before January 31. Sale by nonresident person Any amount
Annual registration renewal not later than Jan. 31.
Optional VAT-Registration
BIR Certificate of Registration (COR) is a basic 1. Not exceeding P1,919,500
requirement (must be seen). 2. VAT persons with mixed transactions who
opted to apply Vat on his VAT exempt
Exempt from Registration Fee 3. Franchise grantees…. Who do not exceed P10M.
1. Individuals earning purely compensation
income Non-VAT Registration
2. Overseas workers Subject to OPT
3. Cooperatives
4. Marginal Income Earners The VAT-Registered Taxpayers
1. Regular VAT
Input VAT – Output VAT = Net VAT Payable
BUSINESS TRANSACTIONS From purchased – from sold
2. 0% VAT
Classifications of Business Transactions No Output Tax
1. Vatable Transactions He can:
2. 0% VAT a. Claim creditable input VAT from other
3. Exempt Transactions output VAT
4. Subject to OPT Transactions b. Carry over excess Input VAT
5. Mixed Transactions c. Claim as VAT refund or convert to Tax
6. Transactions with the Gov’t Unit Credit Certificate the excess