• University of San Agustin

• ACCOUNTING ACCTG

Taxation: Reviewer and Quizzer 19-1 to 19-17

VALUE ADDED TAX-1

Sale of good or properties

1. The value-added tax is imposed when there is a sale, barter, or exchange of goods of properties in

the exchange of goods and properties in the ordinary course of trade or business. “Properties” include

real properties.

“Goods or properties” are tangible or intangible objects which are capable of pecuniary

estimation.

(a) The ordinary meaning of the term sale;

(b) The transfer, use or consumption, not in the course of business, of goods or properties ordinary

course of business goods or properties ordinarily intended for sale or use in the course of business;

(c) The distribution or transfer to shareholders or investors of shares in the profits of a VAT-registered

person;

(d) The distribution or transfer to creditors in payment of debt;

(e) The consignment of goods if actual sale is not made within sixty (60) days following the date such

good were consigned;

(f) The retirement from or cessation of business, with respect to inventories of taxable goods as of

such retirement or cessation.

2. A domestic corporation on real estate business sold a building.

Statement 1. The sale is not subject of the value-added tax because it is not a sale of goods or services;

Statement 2. The sale is subject to the value-added tax because sale of goods and properties are subject

to the value-added tax and real estate is within the meaning of property.

(a) True, true; (b) False, false; (c) True, false; (d) False, true.

Answer d

3. The value-added tax on sale of goods is based on gross selling price.

“Gross selling price” means:

(a) 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.

(b) There can be downward adjustment for the “sales returns and allowances, and sales discounts

granted and indicated in the invoice at the time of sale and the grant of which does not depend upon

the happening of an event”.

Therefore, what the law calls “gross selling price” is actually not sales, and what the law calls

“purchases” is actually not purchases. If gross selling price for purposes of the output taxes means net

sales, purchases for the purposes of the Input taxes shall mean no purchase.