Chapter 2 — Value Added Tax on Importation CHAPTER 2 VALUE ADDED TAX ON IMPORTATION Chapter Overview and Objective: After this chapter, readers are expected to comprehend: The concept of importation The types of consumption tax on importation ‘The list of importations which are exempt consumption The concept of in “original state” for agricultural or marine food products The concept of qualified exemption ‘The scope and applicability of the VAT on importation The concept of landed cost and Import VAT computation The concept of technical importation The treatment of the VAT on importation PONE pEnan IMPORTATION Importation refers to the purchase of goods or services by Philippine residents from non-resident sellers. Types of Consumption Tax on Importation 1. VAT on importation - for the import of goods 2. Final withholding VAT - for the purchase of services from non-residents Comparison between the Consumption Tax on Importation VATonimportation | Final withholding VAT Object consumption Goods Services Imposed upon Importers / buyers Foreign service providers Statutory taxpayer Importers / buyers Resident purchaser of the service* Nature Direct consumption tax Indirect business tax Tax basis Landed cost Contract price Collecting agency BOC BIR Timing of payment | Before withdrawal of | After the month of payment goods “Individuals engaged in business and corporations The VAT on importation is payable to the Bureau of Custom and is paid prior to the withdrawal of the goods from the Customs warehouse. The final 21Chapter 2-Value Added Tax on Importation withholding VAT is 12% of the contract price for services rendered by non. residents. It is remitted to the BIR. IMPORT OF GOODS The importation of goods is either: 1. Exempt importation 2. Vatable importation EXEMPT IMPORTATION A. Importation of exempt goods Certain goods considered basic necessities are not subject to the VAT on importation, such as: 1. Agricultural and marine food products in their original state 2. Fertilizers, seeds, seedlings and fingerlings, fish, prawn, livestock and poultry feeds, including ingredients used in the manufacture of finished feeds 3. Books and any newspaper, magazine, review, or bulletin which appear at regular intervals with fixed prices for sul bscription and sale and which is not devoted Principally to the publication of paid advertisements 4. Passengers or cargo vessels and aircrafts, including engine, equipment and spare parts thereof for domestic or international transport operations B. Importation by VAT-exempt persons 1. International shipping or air transport operat an fuel, goods and supplies Perators on their import of 2. Cooperatives of direct farm including spare parts thereof, to bi production and or processing of their produce > "4 €X¢lusively in the 3. PEZA locators on their import of ge ods or services © Quast-importation 1. Personal and household effects belong; Philippines returning from abroad and none re jqt®,_ 5 resettle in the Philippines 7 % Professional instruments and implements, wean animals, and personal household effects beione NS apparel, domestic Settle in the Philippines, for their own use and oe Pe*S0RS coming go Sauine Not for sale, barter co idents of th, sie . dent citizens coming to D. Importation which are exempt under spectal taws eee ON Internationa, 22Chapter 2— Value Added Tax on Importation IMPORTATION OF EXEMPT GOODS ‘The importation of the following exempt goods is not subject to VAT: A. Basic human food and related goods 1, Agricultural or marine food products in original state 2. Livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption 3, Breeding stock and genetic materials therefore B. Books, newspapers and magazines Passengers or cargo vessels and aircrafts, including engine, equipment and spare parts BASIC HUMAN FOOD AND RELATED PRODUCTS Agricultural or marine food products in original state Import exemption is limited to agricultural or marine food products in their original state or those which undergone simple processing. Good that underwent advanced processing are vatable. Examples of exempt agricultural or marine food products in original state: 1. Grapes, apples, oranges and other fruits 2. Vegetables, tea, ginseng 3. Rice, corn, coffee beans and other edible farm products 4. Marine foods such as fish and crustaceans 5. Poultry and livestock 6. Milk, eggs, and meat for human consumption Livestock includes cow, bulls, calves, pigs, sheep, goats and rabbits. Poultry shall include fowls, ducks, geese and turkey. Marine food shall include fish and crustaceans such as, but not limited to, eels, trout, lobster, shrimps, prawns, oysters, mussels and clams (RR16-2005). To be considered in “original state”, the goods must be in their raw form. However, those that underwent simple processing are also exempt. Meaning of simple processing ‘The term simple processing includes: a. Acts of preparation for the market b. Acts of preservation, or c. Acts of packaging including advanced technological means of packaging Examples of simple acts of preparation: a. Boiling d. Roasting b. Broiling e. Stripping, © Husking f. Grinding 23Chapter 2 — Value Added Tax on Importation Examples of simple acts of preservation: a. Freezing c. Smoking b. Drying d. Salting Packaging is not Processing as it does not alter the nature of the products, It merely involves putting the product in a medium that makes it Convenient for handling, storage or marketing, Thus, goods may still be i using advanced technologi a. Shrink wrapping in plastics b. Vacuum packing ¢. Tetra-packing 4. Other similar packaging methods in their original state ev en if they are packaged cal means, such as: Hence, the following agricultural or marine food products which underwent Processing are also exempt: With simple act of | Wit simple act of | reparation |___preservation With acts S of packagin Husked rice Sundried fruits Tetra-packed fresh fruit juice Corn grits Salted meat Shrink wrapped m, Raw cane sugar Smoked fish eee Roasted beans Dried fish Ordinary salt Ground meat Copra Boiled eggs Lechon Frozen meat or fish Boiled eggs and lechon Though boiled eggs and lech methods used (ie. boiling ‘on are said to be cooked in their lechon are exempt. Ordinary sen: or heating) are simple process) 2 ng. Hence by se, the cooking oiled eggs and Raw Sugar means the natural sugar extracted from mechanical process by pressing the juice; boiled to ctystaly Separate these crystals, and dried, resulting to eeystalts content by weight in dry state corres; degrees and or whose 2015, May 22, 2015) = Wwarcane through simple 2e; filtered using centrifuge te n sugar with sucrose mndiR Of less than 99.59, includes muscobado. (Rp. ed brown su, sponding to a polarimeter color is 800 ICU or less. Raw sugar i The importation of the aforementioned agricultural or marine food Products in their original state is exempt from VAT. 24Chapter 2 — Value Added Tax on Importation Processed agricultural or marine food products Processed agricultural or marine food products pertain to those which have undergone changes in their chemical compositions or have undergone complex processing or treatment or are utilizing advanced technologies in their processing. Examples of vatable processed agricultural or marine food products: Refined sugar Canned sardines Flour Wine or vinegar Butter Marinated milk fish Vegetable or coconut oil__| Soy The importation of processed products and those considered not in their original state shall be subject to VAT on importation. Use or purpose dictates vatability Flowers intended as love gifts are vatable since they are not food but cauliflower, of course, is an exempt human food. Cockfighting chickens are vatable since they are primarily intended for human amusement. They are only food when they lose. However, chicken produced for meat or eggs are VAT-exempt human foods. Farm or fishery inputs Marine or agricultural inputs intended for the production of marine or agricultural food products which are ultimately intended for human consumption are also VAT-exempt. ‘The importation of farm or fishery inputs such as seeds, seedlings, breeding stocks and genetic materials are exempt. Likewise, foods of these inputs such as fertilizers and feeds including ingredients manufacture of finished feeds are also VAT-exempt. Products intended as maintenance of crops, livestock or poultry and supplemental implements of agricultural or inputs such as pesticides, herbicides, animal medicines, fishing equipment, fishing boats, tractors, plows, driers, threshers and harvesters are vatable. Zoo animals, race horse, aquarium fish, fighting cocks and pets are not intended for human consumption; hence, vatable. Feeds of these non-food animals called "specialty feeds” is likewise vatable. Ingredients of feeds for animal food intended for ultimate human consumption is VAT-exempt but ingredients for the processing of human food is vatable. 25Chapter 2 - Value Added Tax on Importation stration ! i T ! aaa Company imported the following agricultural implements: Urea Fertilizer P 800,000 Cargil corn seeds 400,000 Pesticides 600,000 Herbicides 800,000 The fertilizer and seeds are exempt, Note that seedlings and fertilizers. Other farming imple herbicides are subject to VAT on importation. exemption is limited to Seeds, ments such as pesticides and Rules on VAT taxation of poultry and feeds Livestock Poultry | Pets Importation of x x I oA Importation of feeds for xX X v Importation of feed X X v ingredients for Note: The importation of ingredie nts for the processi Of foods for huma nis vatable because processed human foods are vatable. eae Examples of vatable non-food agricultural or marin 2 bogs, wood, bamboo, orchid, and similen fore b. Rubber hem, abaca, tobacco, topical herbs, crops © Shelis, corals, and other non-food marine prod ornaments Race horses, fighting cocks, animals generally considered a '€ products: St products Cotton and other non-food ucts usually used as aquarium fish, 20, gnar © animals, and other BOOKS, NEWSPAPERS, MAGAZINE, R The VAT exemption on th upon the necessity of EVIEW OR BULLETINS e importation of these goods 'S apparently based T education and information Me ae ‘ Thi i Constitution requires the state’ to Bive priority to education ae Patriotism and nationalism, accelerate social 3. BteSS, and promote total . ‘al human liberation and development. (See see 1%, Article “i, Phitip on a il, Phili Constitution) ilippine The Philippine Constitution also recognizes the vital Tole of communication and information in nation-building, (See Sec. 24 Ibi Conditions for exemption of newspaper, magazine review or bulletin; 1, They must appear at regular intervals with fixed Prices for Subscription. 2. The sale must not be devoted principally to the Publication of paid advertisements. 26Chapter 2 — Value Added Tax on Importation Note that exemption does not extend to other school supplies such as chalk, board markers, pens, notebook; pad paper and office supplies. PASSENGER OR CARGO VESSELS AND AIRCRAFTS The VAT exemption covers the import of passenger or cargo vessels and aircrafts, including engine, equipment and spare parts thereof for domestic or international transport operations. ‘The VAT exemption on the import of these items lapsed under RA 9295 but was reinstated by RA 10378 and was codified under the TRAIN law. This incentive for VAT-exemption is granted by law in an effort to help the modernization of the shipping, transport and tourism industry. To qualify for exemption, the importation must be subject to the requirements on restriction on vessel importation and mandatory vessel retirement program of the Marina Industry Authority (MARINA): - Passenger or cargo vessels - 15 years = Tankers - 10 years = High speed passenger crafts - 5 years Illustration Total Transport Group has land, sea and air transport operations. To beef up its operations, it imported 5 units of Daewoo bus, 1 unit of aireraft and 2 cruise ships. The importation of the airplane and ships are exempt but the importation of the buses for land transport is subject to VAT. Note to readers: In mastering the consumption taxes, legal sensitivities must be considered. It is an established principle of law, that items not included are deemed excluded. Exempt goods must be strictly construed to cover only to those listed by the law as discussed herein. Other basic necessities such as medicines, clothing, processed foods, kitchen supplies, school supplies, and the like are not exempt. A familiarization of the list is imperative. PT PERSONS .ct to VAT on importation, The extent of i VAT-exempt persons are not su their exemption varies per exempt persons. When an exempt importer subsequently sells his exempt importation to a non-exempt person, the non-exempt buyer shall be subject to VAT on 27&b oOoOcr~171—™-—eT Chapter 2- Value Added Tax on Importation i i hall constitute a lien on th i ation. TI e on such importation sh . Eee ae aaee or liens, irrespective of the possessor of Said ‘oods, a eae (Sec. 4.107-1(c), RR16-2005). NIRC: VAT-Exempt Persons under the 1, International shipping or air transport operators 2. Agricultural cooperatives 3. Ecozone-locators International shipping or air transport operators The exemption is limited to the importation of fuel, goods and ‘supplies. Although these goods or supplies are physically brought into the Philippines, they are not intended to be consumed herein. They will ultimately be used in international transport. This consumption is a foreign consumption rather than domestic consumption, Mlustration 1 Malaysian Ferries is an international 5 hipping carrier. It imported to the Philippines fuel and supplies to be used in its shipping operations. Note that the fuel, goods, or Supplies will be consumed in the high seas or in foreign territories outside the country. The importation is not a domestic consumption but a foreign consumption; hence, itis exempt from VAT. Mlustration 2 Pinoy Airline imported jet fuel from Ira the importation is declared for dom declared for international air transport iq at a total cost of estic airline oper; Operations. 60% of the P50,000,000 importation will be consume j not for domestic consumption; hence, it is exempt from VAT. 0; i which will be used domestically will be subject to the VAT on mee portion PS0,000,000. 40% of ‘ations while 60% is Mlustration 3 Lufta Airline, an international air carrier, imported jet fi 40,000,000. It subsequently sold P10,000 ee uel at a total 000 of these to a Feel mgt air carrier, Air, a domestic Lufea Airline is exempt on its importation of the 10,000,000 worth j Fee Air Is not an exempt person and that jet fuels are vatable good be treated as the importer of the P10,000,000 jet fuel and Will be su ufea Airline fs not required to pass the VAT on its sales of the pay Agricultural cooperatives The status of agri-coop as VAT-exempt person is limited direct farm Inputs, machineries and equipment, Parts (RA 9337) to importation of including their spare 28Chapter 2 - Value Added Tax on Importation importation. The tax due on such importation shall Constitute a lien on the Reais Superior to all charges or liens, irrespective of the possessor Of sai goods (Sec. 4.107-1(c), RR16-2005). VAT-Exempt Persons under the NIRC: 1. International shipping or air transport operators . Agricultural cooperatives 3. Ecozone-locators International shipping or air transport operators The exemption is limited to the importation of fuel, goods and supplies. Although these goods or Supplies are physically brought into the consumption rather than domestic consumption, Mlustration 1 ym Iraq ata total the importation is declared for don 2 Sack P50,000,000. 40% of estic airline operat ; ° Aecared for international ar transport opera Perations while 60% is 50% of the P50,000,000 importation will be consumed i 4 in . not for domestic consumption; hence it is exempt from vat Ton the gone Ths Which will be used domestically willbe Subject t0 the VAT on inn My the 40% portion ion, Mlustration 3 Lufta Airline, an international air carr ported f t 40,000,000. it subsequently sold P10,000,000 of these tonsa Ain nal cost of air carrier, et Air, a domestic ier, im ibe Airline is exempt on its importation of the Pg 000,000 000,000 w, ; fee Air is not an exempt person and that er ‘fuels are vatabje goods itt pie be treated as the importer of the P10,000,06 Jet fuel and will be subject will ‘ufea Airline is not required to pass the VAT of i sales of the fue, /°°*€4 to Var. Agricultural cooperatives ‘he status of agri-coop as VAT-exempt Person is limited to importation of direct farm inputs, machineries and equipment, including thei; Spare Parts (RA 9337) 28Chapter 2 — Value Added Tax on Importation Conditions for exemption: 1, The cooperative must be an agricultural cooperative duly registered and in good standing with the Cooperative Development Authority (CDA). 2, The importation involves direct farm inputs, machineries, equipment and their spare parts to be used directly and exclusively in the production or processing of their produce. Illustration 1 Abra Farmer's Cooperative imported the following equipment: Tractors and threshers to be used by the cooperative P_ 2,000,000 Plows and water pumps to be resold to members 3,000,000 Fertilizers and hybrid seeds to be sold by the cooperative 1,000,000 Herbicides and pesticides to be used by the cooperative 500,000 Cars for the use of cooperative directors and officers 2,000,000. The following table summarizes the tax treatment of the importation: Tractors and threshers to be used by the cooperative Exempt, Plows and water pumps to be resold to members Vatable Fertilizers and hybrid seeds to be sold by the cooperative | _Exempt Herbicides and pesticides to be used by the cooperative Exempt Cars for the use of cooperative directors and officers Vatable Note: 1. The importation of machineries and equipment forthe processing or processing needs of the cooperative is exempt; hence, tractors and threshers are exempt from VAT on importation. ‘The importation of fertilizers and seeds is exempt to any importer. The importation of herbicides and pesticides which are “direct farm inputs’ is exempt to cooperatives. Note that the importation of farmers of herbicides and pesticides is vatable. 3. Although plows and water pumps qualify as machineries, they are not intended for the use of the cooperative; hence, these are also vatable, 4, Theears are vatable because they are not direct farm inputs, machineries, or equipment. Mlustration 2 t ‘Assume that fertilizers and herbicides in the foregoing illustration is subsequently sold by Abra Farmer's Cooperative to Jon Juan, member farmer. What is the tax consequence of the sale? Jon Juan shall be treated as importer and shall be subject to VAT but only to on vatable goods such as the herbicides. Since the fertilizer is @ VAT-exempt goods, Jon Juan shall not pay VAT on importation thereon. Illustration 3 A credit cooperative imported a computer server, from abroad at a cost of rrally subject to VAT on importation since the P1,500,000, This importation is gene! I exemption does not extend to cooperatives which are not engaged in processing or production, 29Chapter 2 - Value Added Tax on Importation Mlustration 4 A mining cooperative imported an ozone generator and an ultraj ifine Ofe grinding machine for its gold recovery plant. The importation is generally subject VAT because the cooperative is not an agricultural cooperative. Mlustration 5 Arado Coop, a farming cooperative, imported ten tractors and 20 sacks of hybrid seeds. Arado Coop subsequentl ly sold four tractors and 5 sacks of hybrid Seeds to Mr. Laco, a cooperative member, Mlustration 6 A cooperative imported frozen meat from China, It subsequently sold all of this to Philippine consumers. The importation of frozen ‘meat, an exempt goods, is an exempt importation for any importer. Hence, the sale by the cooperative to the consumers (ie, final sa yamption) shall not be subject to VAT: Likewise che buyers shall not be subject to VAT on importation. Ecozone-locators Ecozones are designated places of economic activity fo, i Goods or services for the export market, By legal etion counts of considered foreign countries and are deemes Outside Customs territ Thus. the importation of goods into the esenec zones by locators ¥, Srembt not only from VAT on importation but alse fo customs duties. The Gemption from VAT covers any goods, supplicy ©” machineries brousne into the ecozones by locators. es brought Technical Importation The rules of VAT on importation apply to tech consumers in a customs territory fi nical im, Tom persons loca Zones (Sec. 4.107-1, RR 16-2005). al importation by ted in Special Economic Customs territory refers to the Portion of the Republic outside of designated special eco nomic zones (Ecozones)., “Technical importation" refers to the purchase of non-Ecozone Philippine residents from Philippine Ecozone-registered enterprises, By legal fiction ecozones are considered foreign territories. Hence, the puretane from Economic zones such as but not limited to, Subic-Ecozone, Zambo-Ecozone and Cagayan-Ecozone is subject to the VAT on importation, 30 of the Philippin (RR2-2005) ">Chapter 2— Value Added Tax on Importation similarly, sales to Ecozones are subject to zero-rated VAT for VAT taxpayers pecause Ecozones are considered foreign territories. Likewise,sales to Ecozones are exempt from business tax for non-VAT taxpayers (See Sec. 109 «) and (V), NIRC as amended). Ilustration 1 Winshield Corporation, a PEZA locator, sold scrap metals to Recycle Industries Corporation, a customs territory buyer (ie., buyer outside the Ecozone). Recycle Industries shall pay the VAT on importation directly to the Bureau of Customs (BOC). Winshield Corporation is not required to impose the VAT on its sales. However, it must be furnished a copy of the receipt issued by the BOC for the VAT payment (See BIR Ruling No. DA-031-2007, January 19, 2007). Mlustration 2 KT, an ecozone locator, imported two machineries for use in the ecozone. It resold one machinery to S3, a fellow PEZA-locator, and resold the other to T4, a person outside the zone. The importation by the locator shall be exempt. The sales to $3 shall not be subject to business tax since it is deemed a foreign consumption. $3, also an ecozone locator, shall not likewise be subject to the VAT on importation. However, T4, a non-locator, shall pay VAT on importation on the machinery it purchased from KT. QUASI-IMPORTATION 1. Import of personal and household effects belong to residents of the Philippines returning from abroad or non-resident citizens coming to resettle in the Philippines 2. Professional instruments and implements, wearing apparel, domestic animals, and personal household effects belonging to persons coming to settle in the Philippines, for their own use and not for sale, barter or exchange Conditions for exemption: 1. The personal and household effects belong to Philippine residents or non-residents intending to resettle in the Philippines 2. The goods are exempt from Customs duties Note that these goods are past consumptions which have been previously Subjected to consumption tax herein. The importation of personal or household effects or professional implements by non-residents intending to resettle in the Philippines is a foreign consumption not subject to Philippine ‘consumption tax. 31Chapter 2 - Value Added Tax on Importation Note that when these were purchased previously, they were already subjected to consumption. taxes. The VAT on importation applies ty importations which represent current consumptions of personal, householg or professional effects. It does not apply to their past consumption. Illustration 1 Mr. Siman was employed abroad as an OFW. He went abroad taking with him personal effects such as clothes, pieces of personal jewelry and gadgets aggregating P300,000 in value. When his contract ended, he returned to the Philippines bringing with him the same effects which now have an aggregate value of P280,000, The importation (i.e., return) since these are past purchases Purchased in the Philippines, of the personal effects will not be subject to VAT which had been subjected to consumption tax when Illustration 2 Mlustration 3 Mrs. Kookai Ukay, a Philippine resident, worth P300,000 from abroad to be sold in her “Ukay-ukay" s, ! Philippines. She reserved P50,000 of these for her personayusu® exper in the The entire P300,000 purchase of goods from abroad is @ domestic con fe subject to the VAT on importation. This rule applies wrttge regard to the aubtion Af the importation whether for business or for personal no leas Illustration 4 Mrs. Lovely Bulalo, a non-resident Filipino busing her business in France. She decommissioned th esswoman, owns a machine in ; © machine to be transferred to her business in the Philippines. Although the machine is a past foreign consumption, to the Philippines Is subject to VAT because the VAT- personal, professional or household effects. the importation Of the same exemption is limited only ra 32Cie Chapter 2— Value Added Tax on Importation jiustration 5 An international non-profit organization based in Switzerland sent goods intended as donation to victims of flood in the Philippines. The goods consist of jarious household effects, grocery goods and rice. The importation of these donated goods into the Philippines is subject to VAT, except for the rice - a VAT-exempt goods. These imported donations are exempt jrom VAT if made in favor of accredited non-profit organization. Importation of professional instruments and implements, wearing apparel, domestic animal and personal household effects Conditions for exemption: 1, The goods belong to persons who come to settle in the Philippines. 2. The goods must accompany the person upon arrival or within 90 days before or after his/her arrival. 3, There must be evidence to show that the change of residence is bona fide. 4. The importation is not a vehicle, machinery or ‘other equipment used in the manufacture or merchandise of any kind in commercial quantity- Ilustration 1 Mr. Marquez, a professional boxer, applied for an application to migrate in the Philippines and was granted by the Philippine government. He brought his boxing gears and household effects including his personal car to the Philippines. The importation of professional instruments and household effects are exempt but the importation of the car is subject to VAT. Mlustration 2 ter, arrived in the Philippines with an Mr. Kung Fu, a Chinese martial arts mas immigration visa. He brought with him the following which he declared as his Personal effects: 10 pieces of brand new iPhone 6 P 150,000 each 10 pieces of brand new IBM laptops P 80,000 each 5 desktop computers P-40,000 each Lpiece of used laptop P-30,000 of used iPhone 4S. 20,000 400 apparel and travelling bag 7,000 The used laptop, iPhone 45, calculator, clothes, and apparel are apparently Personal effects which are past consumptions; hence, these are exempt from VAT. iPhone 6, 1BM laptops and desktop computers is tof personal effects, These items are hence, subject to VAT. Th len eee and quantity of the gees inconsistent with the concep! ‘estionably for domestic consumption; 33os Chapter 2 - Value Added Tax on Importation Illustration 3 : : While in Dubai, Mrs. Waca bought a car and numerous pieces of Jewelry 4 her salaries as OFW. She intended to sell the jewelry to her friends an, townsfolk in the Philippines. When her contract ended, , Mrs. Waca brought iy the car and the jewelry to the Philippines. The importation of the car is vatable since it is not a personal effect. The importeg Pieces of jewelries are in commercial quantity which makes them clearly no, personal items; hence, vatable. IMP\ 10) PT UN) OR. Import that are exempted by special laws, treaties or international agreements to which the Philippine government is a signatory is not subject to the VAT on importation, THE VAT ON IMPORTATION Other importation of goods is sub 1. importer is engaged or not e 2. importer isa VAT or non-VA‘ 3. importation is for business 4. non-resident seller is enga ject to VAT regardless of whether the: ngaged in trade or business T business or personal use ged or not engaged in business As a consumption tax, the VAT on i Purpose of the importation and engaged in business, Presumption of vatability Importation is generally subject to VAT unless it can be re ‘ove t under any of those conditions discussed herein or under a provision ot special law or treaty. The burden of proof in establishing VA; i rests upon the importer, ‘6 VAT exemption Tax basis of the VAT on importation The VAT on importation is computed as 12% of the total landed cost of the importation. Composition of landed cost: A. Dutiable value B. Oher in-land costs 1. Custom duty 2. Excise tax, ifany 3, Other in-land costs, such as: a. Bank charge e. Arrastre charge b. Brokerage fee f, Wharfage due c. Arrastre charge g. Documentary stamp tax d. Wharfage due h. Import processing fees 34Chapter 2 Value Added Tax on Importation simply stated, landed costs encompass all costs of importation incurred prior to the withdrawal of the goods from the warehouse of the Bureau of Customs, except unofficial or illegal payments made. The dutiable value, also called transaction value, refers to the total value used by the Bureau of Customs in determining customs duties, such as: 1. Cost of the goods 2. Freight 3. Insurance 4. Other charges and costs to bring goods herein ‘The dutiable value encompasses all costs incurred in bringing the goods up to the Philippine port and prior to any other in-land costs of import. The customs duty is computed as: Dutiable value x Exchange rate x Rate of Duty Mlustration 1- basic MRS Trading Corporation imported goods from abroad for domestic sale. Shown below are the details of the importation: Peso value of supplier's invoice P 2,000,000 Other costs incurred to bring goods to Philippine port 70,000 Other charges before withdrawal of goods, including 5,000 facilitation fee paid to a fixer 85,000 Customs duties 10% Freight of goods from BOC warehouse to MRS warehouse in Makati City 20,000 ‘The customs duties shall first be computed as: Peso value of supplier's invoice P 2,000,000 Other costs to bring goods to the Philippines __ 70,000 Dutiable value P 2,070,000 Rate of duty ——10% Customs duties b28Z, ‘The VAT on importation shall be computed as: Dutiable value P 2,070,000 Other official costs paid before withdrawal of goods from the BOC 80,000 Customs duties ——207,000 Total landed cost P 2,357,000 Multiply by: VAT rate 12% VAT on importation P_282,840 35Chapter 2 - Value Added Tax on Importation 2.- comprehensive ee eae iaeeried a sports car from the US for personal use, Th following shows details of the charges of the importation: Purchase price $ 50,000 Insurance in transit 500 Freight __800 Total invoice price $__51.300 Arrastre P 8,500 Bank charge 6,000 Wharfage dues 800 Brokerage fee 90,000 Custom’s documentary stamp 265 Import processing fee 250 Total other charges rE 105,815 The relevant exchange rate per Bureau of Customs Memorandum Circular is P45:$1. The importation is subject to P683,510 excise tax and 30% tariff rate. The dutiable value and customs duties shall be computed as: Purchase price $ 50,000 Insurance in transit 500 Freight —___ 800 Dutiable value in $ $ 51,300 Multiply by: Exchange rate 45.00 Dutiable value in Peso P 2,308,500 Multiply by: Rate of duty 30% Customs duty 2 692.550 The landed cost and value added tax are computed as: Dutiable value P 2,308,500 Customs duty 692,550 Excise tax 683,510 Other charges —— 105,815 Landed cost P 3,790,375 Multiply by: VAT rate on import — _ "4294 VAT on importation P___ 454.945 The VAT shall be paid to the Bureau of Customs (BOC) using a form prescribed by the BOC. IMPORT OF SERVICES The purchase of services from non-residents may be: 1. VAT-exempt 2. Subject to specific percentage tax 36Chapter 2 Value Added Tax on Importation 3. Subject to final withholding VAT ‘The import of services is generally subject to a final withholding VAT, except when it is exempted or is imposed with a percentage tax. Nature of the Final Withholding VAT In principle, domestic consumption by anybody (business or non-business) of services from abroad should be subject to VAT regardless of the place (within or without) where the service is rendered. However, our current tax law views the final withholding VAT as a business tax. The VAT is deemed imposed upon non-resident service providers. For this purpose, the law conclusively presumes that the non-resident sellers are engaged in business even if their sales transactions are merely casual. Since non-residents cannot be obligated to file tax returns due to territorial consideration, the resident buyer is obligated to “withhold” the VAT and to remit the same to the government. Thus, the term “final withholding VAT.” ‘The VAT is deemed passed-on by the non-resident service provider which, in turn, is withheld by the resident purchaser of the service. As a withholding tax, the obligation to withhold the VAT technically exists only ift 1. the service is rendered within the Philippines; and 2, the payor-purchaser of the service is an individual engaged in business ora corporation There is no obligation to withhold the VAT if the payor is not-a business, except for corporate purchasers of service. Moreover, the situs of taxation of services is determined by the place where the service is rendered and not the place where the output of the service will be ultimately used. Hence, the service must be rendered within to be subjected to the withholding tax. Illustration 1 Eagle Company sought the help of Mr. Putin, a repairman doing business in ‘Australia, to fix its malfunctioning machinery in the Philippines. The contract price was P1,000,000. Eagle Company shall pay P120,000 (12% x PIM) final withholding VAT to the BIR. Query: 1. What if Mr, Putin is not engaged in business in Australia? The contract price is still subject to the 12% final withholding VAT. Mr, Putin is conclusively presumed engaged in business. 374 Chapter 2 - Value Added Tax on Importation i -profit institution? The contract price; if Eagle Company is a non-prot rn * ag : eueree 12% final withholding VAT. Even non rofit corporation required to withhold. ” if i locator? The contra } What if Eagle Company is an ecozone subjected to the 12% final withholding VAT because ec ct price will not, outside the country (i.e. non-residents) by legal fiction. ‘ozone locators i, Mlustration 2 ‘ Mr. Wong, a resident travelling sales agents, asked the assistance of Mr. Te; Chinese national doing business abroad, t Ba ‘0 help him install a GPS tracking device in his car for P300,000. Mr Wong shall pay P36,000 (12% x P300,000) final withholding VAT. Query: 1 » What if Mr. Teng is not engaged in business in China? The contract rice is Still subject to the 12% final withholding VAT since he will be presumed engaged in business, What if Mr. Wong is not a businessman? The contract price shall not be Subject to final withholding VAT because withholding tax obligation exists only Jor individuals engaged in business, im is not engaged in business * Purchase of services from non- €cozone locators Non-residents when the individual purchaser Tesidents by VAT-exempt Persons such as [P Case the service is rendered by nancre.: final withholding VAT is not impose et ecozone oe considered non-residents, The withholding Tequireme tomy ns irae ed wit mon-residents, Hence, the transact? shall be exesonnct be the final withholding VAT. (See BIR ITAD Ruling No 311-14 dated Nowe 14 and 316-14 dated November 24 2014) "tated November 4, 20 IMPORT OF SERVICES SPECIFICALLY supy The only imp JECT To. ort of service that is currently subje TERCENTAGE Tax direct acquisition of insura on insurance policies dir ct to a percentage tax is the nce Cover from abroaa, ne percent eo *Ctly sourced abroad ig supjct Premium payment tax. The policyholder sha bj 9 ‘centage ll pay the same to the BIR, ere : 38Chapter 2— Value Added Tax on Importation VATABLE IMPORT OF SERVICES All other of import of services is subject to final withholding VAT. The final withholding VAT is computed as 12% of the contract price. Unlike withholding income tax, this amount shall not be deducted upon the amount to be remitted abroad because it is deemed passed-on by the non-resident service provider and “withheld” by the resident payor-withholding agent. Examples of vatable import of services: 1. Lease or use of properties or property rights owned by non-residents 2. Services rendered to local insurance companies, with respect to reinsurance premiums payable to non-residents 3, Other services rendered in the Philippines by non-residents Mlustration 1 Session Food Corporation is a licensed franchisee of Ronald, Inc, a non-resident foreign franchisor. During the month, Session is due to pay P800,000 royalties. The final withholding VAT shall be: Royalties P 800,000 VAT tax rate —_ 22% Amount due Ronald, Inc. P__96,000 The amount to be remitted to Ronald, Inc. abroad shall be: Royalties P 800,000 Less: Final income tax (P800,000 x 30%) ___ 240,000 Amount due Ronald, Inc. P_560,000 Unless agreed that the contract price is VAT-inclusive, the VAT is not deductible against the gross royalty because the Withholding VAT is not a tax on income. Remember that that non-resident corporations are subject to 30% final withholding tax on income. Illustration 2 Phil Mines imported a customized ozone generator from Chen Company in China, Before shipment, Phil Mines had the machine customized by Guangzu Industries in China for P500,000. The generator has a total landed cost of P1,200,000 on importation. Chen Company installed the generator at Phil Mine's processing plant in the Philippines for P220,000. Phil Mines shall pay the following VAT on importation to the BOC: Import landed cost P. 1,200,000 Multiply by: 12% VAT on importation P144,000 39Sy Chapter 2 — Value Added Tax on Importation Phil Mines shall likewise pay the following final withholding VAT to the Bir: Installation service contract price P 220,000 Multiply by: 12% Final withholding VAT P___26,400 The customization service by Guangzu Industries is not subject to final var since the service is done abroad. The installation service is subject to final withholding VAT since it is done within, Payment of the withholding VAT Using BIR Form 1600, the withholding VAT is re: ‘mitted monthly on or before e 10" day of the following month after the wii for taxes withheld for D, ithholding was made, except ecember which shall be filed or paid on or before January 25 of the following year. Treatment of the VAT on importa 1, f tion and the Withholding VAT If the resident Purchaser is a VAT-registered business, it can claim the on or withholding VAT as input VAT creditable against VAT on importati its output Var. 2. Ifthe resident is not engaged merely added to the costs of the in business, the var on importation is 800ds imported, 40Chapter 2 — Value Added Tax on Importation CHAPTER 2: SELF-TEST EXERCISES Qe Discussion Questions ree ene aenre RPS What is importation? Is VAT on importation a business tax? Explain. What is the nature and scope of the VAT on importation? Enumerate the list of exempt importations. What is meant by the phrase “in original state”? What is landed cost? Distinguish dutiable value from landed cost. Discuss technical importation. Enumerate the current and existing ecozones in the Philippines. Discuss the final withholding VAT, its scope and nature. | Discuss the treatment of the VAT on importation and the final withholding VAT. True or False 1 1, z 3. 4, an yen 10. 11. 12. 13. 14. 15. The VAT on importation is a business tax. The final withholding VAT is a business tax. The VAT on importation is 12% of the value added on importation. The VAT on importation is 12% of the receipts from the sale of services abroad. Importation is subject to either VAT or percentage tax. The final withholding VAT is 12% of the contract price of purchased services from within the Philippines. The sale of services abroad is subject to 12% final withholding VAT. ‘The VAT on importation is paid to the Bureau of Internal Revenue. ‘The final withholding VAT on services is paid to the Bureau of Internal Revenue. The importation of any agricultural or marine products is VAT exempt ‘The importation of professional instruments and implements is exempt from VAT. The importation of any product intended for human consumption is VAT- exempt. The importation of ingredients which are intended for the manufacture of goods for human consumption is VAT-exempt. The importation of professional instruments and implements in commercial quantities is VAT-exempt. The importation of equipment, vessels is VAT-exempt. machinery and spare parts for marine ‘True or False 2 is 2. 3. ‘ot subject to the VAT on importation. ture inputs are VAT-exempt. products is vatable. Resident foreigners are n All agricultural or aquacul ‘The sale of processed agricultural 41os Chapter 2 - Value Added Tax on Importation 4, The importation of books and newspapers is VAT-exempt. 5. The importation of life-saving equipment is VAT-exempt. 6. The lease of aircrafts or vessels from non-residents is exempt from the fing) withholding VAT. / i 7. The purchase of services from foreign consultants is exempt from fina, withholding VAT, : j 8. The importation of fuel, goods, and supplies by international Carriers is VAT-exempt. 9. The importation of ay 10. The importation of VAT-exempt. 11. The VAT on importation is payable only by those engaged in business. 12. The final withholding VAT on importation of services is payable even by those not engaged in business, 13. The VAT on importation and the final withholdin Input VAT creditable against Output VAT. +4. In economic realty, the VAT on importation and the final withholding VAT are taxes paid by non-resident sellers, 15. Qualified exempt importation is exempt from VAT only if made by an exempt person. = ricultural machineries by farmers is exempt. agricultural machineries by agricultural cooperatives is ig VAT can be claimed as Multiple Choice: Theory - agricultural or marine food products: Part 1 1. Which is subject to value added tax? a. Sheep ©. Cut sheep meat b. Sheep wool 4. All of these 2. Which agricultural product is VAT-exempt on importation? a. Charcoal ¢. Lumber r b. Wood .Corn 3. Which importation is subject to VAT? a. Importation from abroad b. Purchase of goods from economic zones in the Philippi Both AandB nes d. Neither A nor B Which is not subject to VAT on importation? a. Importation of goods for personal use b. Importation of goods for business use ¢. Purchase of goods from Ecozone entities d. Purchase of goods from other domestic sellers 5. Which of the following is subject to the VAT on importation when imported? a. Books ©. Mushroom b. Table sugar d. ordinary salt 42Chapter 2 - Value Added Tax on Importation 6. Which non-food agricultural product is exempt from VAT on importation? a. Chicken manure c. Live hogs b. Eggs [Link] 7. Which of the following is not exempt from VAT? a. Grapes c. Orchids b. Oranges d. Kiwi fruits 8. Which seedling is vatable? a. Grafted mango seedlings c. Narra seedlings b. Pomelo seedlings d. Guava seedlings 9, Which agricultural produce is exempt from VAT? a. Rubber [Link] b. Abaca hemp d. Firewood 10. Which is vatable? a. Bamboo shoots c. Banana fruits b. Banana hearts d. Bamboo poles 11. Which is VAT-exempt? a. Cotton soft wood c. Cotton wool b. Cotton seeds d. None of these 12. Which is VAT-exempt? a. Coconut lumber c. Coconut shells b. Coconut brooms sticks _d. Coconut meat Which is subject to VAT on importation? a. Wheat c. Barley b. Coffee bean [Link] 1, » 14, Which agricultural product is subject to VAT? a. Honey c. Sugar cane b. Rattan cane d. Sugar beets 15, Which is subject to VAT on importation? a. Cocoon silk c. Furniture b. Pineapple silk d. All of these 16. Seedlings of this tree are exempt from VAT on importation. a. Rubber tree c, Palm oil tree b. Paper tree d. Mahogany tree 43Chapter 2 - Value Added Tax on Importation 17. Which of the following when imported is subject to VAT? a. Rubber c. Cacao b. Com d. Peanuts 18. Which of these seeds is not VAT-exempt? a. Corn seeds c. Flower seeds b. Mustard seeds d. Cabbage seeds 19. Which of the following feeds is subject to VAT on importation? a. Formulated horse feeds c. Swine feeds b. Corn grits 4. Broiler feeds 20. Feeds of the followin, a. Zoo animals b. Aquarium fish animals are considered as specialty feeds, except for ¢ Livestock d. Fighting cocks Multiple Choice: Theory - Agricultural or marine food products: 1. Which is VAT-exempt? Part 2 a. Peacock feathers c. Hamsters b. Eggs d. Leather 2. Which is vatable on importation? a. Tealeaves c. Cayenne pepper b. Tobacco leaves 4. Chinese cabbage 3. Which of these is VAT exempt on importation? a. Almonds ©. Ginseng roots b. Blueberries 4. All of these 4. Which is not exempt from VAT? a. Sunflower seeds c. Peanuts. b. Beeswax d. None of these Which is not generally considered as pet und a. Rabbits ¢. Race horses b. Zoo animals d. Fighting cocks wa ler the regulation? 6. Which of these is non- a. Lovebirds atable? ©. Goldfish b. Parrots d. Millefish 7. Which is not a VAT-exempt poultry? a. Ducks c. Turkeys b. Geese d. Game fowl roosters 44Chapter 2 - Value Added Tax on Importation 8. 10. L 13. 14. 15. 16. 1 S x Which of these animals is vatable when imported? a. Cows c. Goats b. Rabbits d. Race horses Which is a vatable agricultural input? a. Fertilizers [Link] b. Pesticides d. Seedlings The following are generally considered as pets which are vatable when imported except for a. Janitor fish cc. Catfish b. Goldfish d. Koi fish . Which of these is taxable with VAT on importation? a. Yellowfin tuna c. Blue marlin b. Pink salmon d. Butterfly fish Which of the following seafood is considered as vegetable and therefore VAT-exempt? a. Kelp [Link] grapes b. Sea lettuce ("Green nori”) d. All of these Which of these is vatable? a. Seashells c. Squids b. Octopuses d. Shrimps Examples of mollusk and shellfish: A. Crabs [Link] C.Lobsters__—_—D. Clams Which of these is subject to VAT on importation? a. AandD [Link] of these b.. BandC d. None of these Which of these agricultural products is not considered as being in its original state? a. Kopra c. Refined sugar b. Muscovado sugar d. Ordinary salt By revenue regulation, which of the items below is not considered in original state? a. Marinated fish c. Frozen meat b. Dried fish d. Smoked fish Which product is non-taxable with VAT on importation? a. Fresh cow's milk c. Butter b. Olive oil d. Parmesan cheese 45Chapter 2 - Value Added Tax on Importation i i below is taxable with VAT? 1 ta * Se Senieeeaed meat _¢,Tetra-packed fresh fruit juice b. Vacuum-packed vegetables d. Canned fruits 19. Which is not considered as simple processing? a. Freezing [Link] b. Stripping 4d. Marinating 20. The following advanced technological means of packaging are deemed not to alter the nature of agricultural marine food products thereby retaining their original state, Which is the exception? a. Canning C Plastic shrink wrapping b. Vacuum-packing d. Tetra-packing Multiple Choice: Theory - Other exempt importation 1. Which is not exempt from VAT on importation? a. Importation of books b. Importation of school supplies © Importation of magazines 4. Allofthese 2. Which importation is not VAT-exempt? a. ee i flippant household effects of Tesidents coming to b. setlepera of tly inthe Pa setold effects of foreigners coming to © oral a Personal and household effects which are subject to d. Allofthese 3. The importation o} subject to VAT when fYolumeis notin commercial quantity b- goods accompany the person or ative withi his/her arrival. “hin 30 days betore or after importation invol d. Allofthese f Professional instrumen i ie ents and implements may be Ives vehicles and Machineries, 4. Which importation is exempt from VAT? a. Importation of books bya school b. Importation of books bya student © Importation of books by a bookstore d. Allof these 46Chapter 2 — Value Added Tax on Importation 5, The importation of which transport medium is exempt from VAT? a, Seaorair [Link] b. Land d. None 6. Examples of Transport vehicles: A. Bus B. Cars. [Link] D. Aircraft Which of these is not exempt from VAT when imported? a CandD [Link] of these b. AandB d. None of these 7. Which importer is exempt from VAT on importation of fuel, goods and supplies? a, Domestic carriers b. International carriers c. Domestic carriers on their international operations d. Either BorC 8 Which of the following items is subject to VAT on importation to an individual who is intending to settle in the Philippines? a. Vehicles b. Professional instruments ¢. Household effects d. Personal effects 9. The importation of fuel, goods and supplies is not exempt from VAT when used in a. Domestic operation b. International shipping operations c. International transport operations 4. Any of these 10. Which is vatable? a. Importation of life saving equipment b. Importation of safety or rescue equipment c. Importation of spare parts, steel or other metal plates for marine vessels d. None of these 11. The importation of vessel or aircraft for domestic operations is a. vatable. b. always VAT exempt. poe . Paty ¢. VAT exempt if the importer complies with maximum service life set by law. i 4. vatable ifthe importer complies with maximum service life set by law. 47ition Chapter 2- Value Added Tax on Importa' rp supplies for domestic shipping o, ait 12. The importation of fuels, goods and supp ” transport operations is a. vatable. ‘ ._ always VAT exempt. / : ° vatableifthe importer is adomestic carrier. 4. VAT-exempt if the importer is a domestic carrier. 13. The importation of farm machineries and equipment is exempt when imported by : a amember of a cooperative. b. trader engaged in business. © an agricultural cooperative. d. Aorc 14. Who has the burden of proving exemption from VAT on importation? a. The government c. The seller b. The importer-buyer d. Both A and C 15. Which is a qualified exempt importation? a. Importation bya ‘Cooperative of farm e b. Importation by a cooperative of, ice ¢. Importation of books 4. Importation of marine food Products quipment 16. Which is nota qualified exempt importation? @ Importation of fuels b. Importation of fuels or © Importation of cargo v transport Operations d. Importation of 17. Which of these is non-vatable? a Purchase of services from i a ke i i i engaged in busines: Oreign service Provider who is not b. Purchase of goods from a fore, Ir business abroad a ¢. Purchase of goo d. None of these ‘Ce provider who is engaged in ds from, economic zone enterprises 18. Who shall pay the VAT on i i importat /AT-exempt entity a Thecnege ean tMPored amtete gee trien a VATE» a. The exempt buyer B00ds toa b. The non-exempt buyer c. Both Aand B 48Chapter 2 - Value Added Tax on Importation d. Neither A nor B 19, Importation is not subject to VAT when a. made by a VAT-registered business. b._ made bya non-VAT-registered business. c. itinvolves exempt goods. d. coursed through an exempt importer. 20. Which is not included in landed cost? a. Dutiable value b. Custom’s duty c. Excise tax d. VAT 21. Which is not included in the landed cost? a. Purchase price All incidental cost of bringing the goods to the Customs warehouse c. Taxes other than VAT paid prior to the withdrawal of the goods d. Cost of transporting the goods from the Customs warehouse to the importer’s warehouse or residence Multiple Choice -Problems 1 1. Oceanizers, Inc. purchased the following from abroad: Sea shells and coral decor P 320,000 Tuna and salmon 120,000 Total B_440,000 What is the amount of taxable importation? a PO c. P200,000 b. P120,000 4. P320,000 2. Mr. A imported various personal and household effects with a value aggregating P400,000. P320,000 of these was subjected to a 8% customs duty by the BOC. What is the VAT on importation? a PO c. P42,240 b. P 41,472 d. P48,000 3. Abookstore company imported the following items: Landed cost Books P 350,000 Professional instruments 200,000 School supplies 350,000 Total B_900,000 49ion Chapter 2 - Value Added Tax on Importatio! i IAT on importation? Whatis the total V/ rt b. P6000 4.P108,000 4, Mr.C,a VAT-registered food retailer, imported the following from China: Landed cost i P 250,000 Fruits Vegetables 180,000 Frozen meat 50,000 Marinated milkfish 100,000 Total P_580,000 Compute the VAT on importation, a ©.P 51,600 b. 12,000 4.P 69,600 5. Alexis Furnitures, a percentage taxpayer, imported the following household equipment: Machineries, for business use [Link] 150,000 Heating system, for home use Py Total > 250.000 Compute the VAT on importation, a PO © P 150,000 b. P27,000 4. P 168,000 6. Danes AgriCorp imported the following: Seeds Fertilizers P 400,000 Farming equipment 450000 Herbicides and pesticides “000 Total Eageg ate Compute the VAT on importation, a PO ©.P72,000 b. 42,000 4. P 84,000 7. Home Appliance Company imported the following for Personal use; Furniture P 600000 Rattan 250,000 Lumber 450,000 50Chapter 2 - Value Added Tax on Importation Compute the VAT on importation, a. 30,000 cP 156,000 b. P72,000 .P 204,000 8. Mr. Huligan imported rice from Vietnam, Details of his importation show the following: ‘Total invoice value P 1,000,000 Freight and insurance in transit 50,000 BOC and other charges 20,000 Compute the VAT on importation. a PO ©.P 126,000 b. P120,000 4.P 128,400 9. An agricultural supply dealer imported the following: Com grits P 200,000 Hog feeds 350,000 Specialty feeds 300,000 Compute the VAT on importation. a PO ©. P42,000 b. P36,000 d.P 102,000 10. The following data relates to the importation of cigarettes by Mr. Shinto: Total invoice value P 1,000,000 BOC charges 300,000 Customs duties 200,000 Excise taxes 300,000 Compute the VAT on importation. a P120,000 ¢.P.180,000 b. P156,000 d.P 216,000 Multiple Choice - Problems 2 1. Don Pepito imported a harvester from the United States with a total cost of P1,100,000 before Customs duties. The importation is subject to 10% Customs duties. What is the VAT on importation? a. P 158,400 c.P. 129,600 b. P 145,200 dP 0 s1~s Chapter 2 - Value Added Tax on Importation 2. In the immediately preceding problem, assuming that the im . . POrtation jg made by an agricultural cooperative, what is the VAT on importation? a P 158,400 cP 129,600 b. P 144,000 d.P0 Mr. Smile, a professional practitioner, imported the following: Calculators and computers for his firm P 900,000 Books 600,000 Total 21,500,000 How much is subject to VAT on importation? a PO c.P 1,200,000 b. P-900,000 d.P 1,500,000 Mr. Juan Manuel Marquez arrived in the Philippi i immigration visa. He had with him the following: Peres sith an mmigra Clothing, shoes, and apparel g, shoe P 100,000 Professional instruments and implements 150,000 Personal car Y 300,000 Total costs of personal belongings P_s50.000 Compute the total amount subject to VAT on j i impo a PO ©.P 300,009. PoTtation. b. P-200,000 4.P 550,000 Mr. Xhi, @ non-VAT taxpayer, made the f i goods: following domestic Purchases of Purchase of scrap metals fro m a PEZA-locator Purchase of machine from a Pa2 VAT supplier e000 800,000 What is the imposable VAT on importation? a PO .P96,000 b. P24,000 4.P 120,000 Atlantis Shipping Company imported P 3,000,000 worth supplies for domestic of he company earmarked 60% fuels oad domestic use while 40% was reserved for its international operations = fF s. What is the VAT on importation? a PO ©.P.216,000 b. P 144,000 dP 360,000 52Chapter 2- Value Added Tax on Importation 7. Mr. Beer, a VAT-registered trader, imported equipment with a dutiable value of $40,000 from abroad. The importation was subject to P100,000 BOC charges before 10% customs duties on dutiable value. The exchange rate to the Peso was P43.00: $1. Compute the VAT on importation. a. P218,400 c.P 232,400 b, P227,040 4. P 239,040 8. If an importer paid 15% customs duties in the amount of P24,000 plus P134,000 charges to the Bureau of Customs, what is the VAT on importation? a PO ©. P 35,280 b. P 18,960 .P 38,160 9, Shanum Company had the following data regarding its importation: Invoice price in US Dollars $12,000 Other costs to bring goods to the Philippines P_ 145,000 BOC charges 100,000 Customs duties is 10% of dutiable value Peso-Dollar Exchange rate P 42.80: $1 Compute the VAT on importation. a PO c. P91,032.00 b. P81,643.20 d. P98,935.20 10. Mr. Dolinger imported various merchandise from abroad. The importation was invoiced at $ 5,000, Mr. Dolinger also incurred the following costs of importation: Insurance P 4,000 Freight 15,000 Wharfage fee 4,000 Arrastre charge 7,000 Brokerage fee 8,000 Facilitation fee 5,000 Mr. Dolinger was also assessed P 24,000 and P 18,000, respectively, for customs duties and excise tax. The applicable exchange rate was P42.50:$1. What is the VAT on importation? a. P 25,500 cc. P35,100 b. P30,540 d.P 35,700 53