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Illustrative Problems On VAT On Importation

The document provides 5 examples that illustrate the calculation of VAT on importation and final withholding VAT (FWVAT) in the Philippines. In the first example, the VAT on importation for goods imported for domestic sale is calculated as 12% of the total landed cost, which includes the supplier's invoice, import charges, and customs duties. The second example calculates the VAT on importation of a personally imported vehicle, including customs duties and excise tax. The third example demonstrates that FWVAT at 12% applies to services rendered in the Philippines, even if the service provider is not formally engaged in business. The fourth example shows that royalties paid to a non-resident foreign

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Shamae Duma-an
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197 views6 pages

Illustrative Problems On VAT On Importation

The document provides 5 examples that illustrate the calculation of VAT on importation and final withholding VAT (FWVAT) in the Philippines. In the first example, the VAT on importation for goods imported for domestic sale is calculated as 12% of the total landed cost, which includes the supplier's invoice, import charges, and customs duties. The second example calculates the VAT on importation of a personally imported vehicle, including customs duties and excise tax. The third example demonstrates that FWVAT at 12% applies to services rendered in the Philippines, even if the service provider is not formally engaged in business. The fourth example shows that royalties paid to a non-resident foreign

Uploaded by

Shamae Duma-an
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Illustrative problems on

VAT on Importation
1. Basic Lapaz Trading Inc imported goods from abroad for domestic sale,
shown below are the details:
Supplier’s Invoice P2,000,000
Other cost incurred to bring the goods into the port P70,000
Other Charges before withdrawal P80,000
Facilitation fee 5,000
Custom’s duties 10%
VAT computation:
Dutiable Value (2,000,000+70,000) P2,070,000
Customs duties (2,070,000x10%) 207,000
Other Cost before withdrawal 80,000
Total landed cost P 2,357,000
VAT thereon (2,357,000x12%) P 282,840
2 – Comprehensive
Art Espanto imported a sports car from the US for personal use and details are shown below:
Invoice Price $ 50,000 Arrastre P 8,500
Insurance in transit $ 500 Bank Charges P 6,000
Freight $ 800 Wharfage dues P 800
Total $ 51,300 Brokerage fee P 90,000
Charges incurred w/o OR P 10,000
DST & processing fee P 315
Relevant exchange rate P45/$1 P 115,815
Excise tax P 683,510 Tariff rate – 30%
VAT Computation:
Dutiable Value ($51,300xP45) P2,308,500 Total P3,790,375
Custom’s Duty (P2,308,500x30%) 692,550 VAT thereof (3,790375 x12%) P 454,845
Excise tax 683,510
Other Charges 105,815
3. Final Withholding VAT on Services
Flamingco Co sought the help of Mr. Pattutin, a technical man doing business in
Europe to fix its digital machine in the Philippines. The Contract price is
P2,000,000.
Final Withholding VAT (P2,000,000x12%) = P240,000
Note: the rule is 1. the service is rendered within the Philippines and;
2. the payor/purchaser is engaged in business be it corporate or
individual
► What if Mr. Pattutin is not engaged in business? Still the Contract Price is
subject to FWVAT because he is conclusively presumed to be engaged in
business;
► What if Flamingco Co is a non-profit institution? Still the CP is subject to FWVAT
because Non-profit institution is still required to withhold.
► What if Flamingco Co is an ecozone locator? The CP will not be subject to
FWVAT because ecozone locators are not under the Philippine territory.
4. VATable import services
Guimaras Food Corp or GFC is a licensed franchisee of Donald
Duck Inc or DDI, a non-resident foreign franchisor. During the
month GFC is due to pay P1,000,000 royalties to DDI.
The final withholding VAT shall be: (P1,000,000x12%)
P120,000
Total remittance of GFC to DDI shall be: (P1,000,000-250,000)
P750,000
Total remittance to the BIR: P250,000 + 120,000 = P370,000
Point of discussion:
Why VAT is not deducted from gross royalty for remittance?
5. Cebu Mines imported a customized ozone generator from
Yushen Co. in China. Before shipment, Cebu Mines had the
machine customized by Guan Industries in China for P500,000. the
generator has a total landed cost of P1,200,000. Yushen Co.
installed the generator at Cebu Mines processing plant in the
Philippines for P220,000.
Cebu Mines shall pay the following VAT on importation to the BOC:
Total landed Cost x 12% (P1,200,000 x12%) = P144,000
Cebu Mines shall likewise pay the following final VAT to the BIR:
Installation Price x 12% (P220,000x12%) = P26,400
Note: the customization service is done abroad hence, not subject
to FWVAT.

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