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: 1, 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 awN POI AH 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 VAT on importation | 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- Val withholding VAT is 12% of the residents. Itis re IMPORT OF GOODS The importation of goo ue Added Tax on Importation contract price mitted to the BIR. for services rendered by Ton, ds is either: 1, Exempt importation 2, Vatable importation EXEMPT IMPORTATION ‘A. Importation of exempt goods ; i Certain goods considered basic necessities are not subject to the VAT on importation, such as: ae 1. Agricultural and marine food products in their original a 2. Fertilizers, seeds, seedlings and fingerlings, fish, prawn, livestock and poultry feeds, including ingredients used in the manufacture of finished feeds ae 3. Books and any newspaper, magazine, review, OF bulletin which appear at regular intervals with fixed prices for subscription and sale and “ihich 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 Importation by VAT-exempt persons 1 2. 3. International shipping or air transport operators on their import of fuel, goods and supplies Cooperatives of direct farm inputs, machineries and equipment including spare parts thereof, to be used directly and exclusively in the production and or processing of their produce PEZA locators on their import of goods or services Quasi-importation i. Personal and household effects belongi rsona y elongin; i : Philippines returning from abroad and pon ees eee ‘i ° resettle in the Philippines eo te oe Professional instruments and imy 0 plements, weari tie animals, and personal household effects belonging to ome ening 7 settle in the Philippines, for t geen their own use and not for sale, barter Importation which are exem| es pt under special laws and internation! 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: Grapes, apples, oranges and other fruits Vegetables, tea, ginseng Rice, corn, coffee beans and other edible farm products Marine foods such as fish and crustaceans Poultry and livestock Milk, eggs, and meat for human consumption SR PN Livestock includes cow, bullls, 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 c. 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, t merely involves putting the product in a medium that makes it Convenien for handling, storage or marketing. Thus, goods may still be in their original state even if they are package using advanced technological means, such as: a. Shrink wrapping in plastics b. Vacuum packing c. Tetra-packing d. Other similar packaging methods Hence, the following agricultural or marine food products which underwent processing are also exempt: With simple act of | With simple act of preparation __ preservation With acts of packaging Husked rice Sundried fruits Tetra-packed fresh fruit juice Corn grits Salted meat Shrink wrapped meat Raw cane sugar Smoked fish Roasted beans Dried fish Ordinary salt Frozen meat or fish Ground meat Copra Boiled eggs Lechon Boiled eggs and lechon Though bolled eggs and lechon are said to be cooked in th " ; + n leir ordi dking: methods used (ie. boiling or heating) are simple processing, pei see ee cou lechon are exempt. 18 Hence boiled egg Raw Sugar means the natural sugar extrac a ted fi imple mechanical process by pressing the juice; boiled to crystal teed nae ge separate these crystals, and dried, resuiltin i content by weight in dry state corresponding toa alte rown sugar with suctass ' larimete i 99.50 degrees and or whose color is 800 ICU Rave meter reading of less than 2015, May 22, 2015) or less. Raw sugar includes musesbado. (RRB The importation of the aforementioned agri ta a . in their original state is exempt from vagy "Al oF marine food produc 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 Ilustration 5 : \ Simaron 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 exemption is limited t0 seog, seedlings and fertilizers. Other farming implements such as pesticides ang herbicides are subject to VAT on importation. Rules on VAT taxation of poultry and feeds —— Livestock Poultry Pets Importation of X x a Importation of feeds for x x we Importation of feed X X v ingredients for Note: The importation of ingredients for the processing of foods for human consumption is vatable because processed human foods are vatable. Examples of vatable non-food agricultural or marine products: a. Logs, wood, bamboo, orchid, and similar forest products b. Rubber hem, abaca, tobacco, topical herbs, cotton and other non-food crops ©. Shells, corals, and other non-food marine ornaments 4. Race horses, fighting cocks, aquarium fish, zoo animals, and othet animals generally considered as pets Products usually used 3 BOOKS, NEWSPAPERS, MAGAZINE, REVIEW. OR BULLETINS The VAT exemption on the importation of these 800ds is apparently based upon the necessity of education and information. The Philippine constitution Tequires the state to give Priority to education to fostet patriotism and nationalism, accelerate social progress, and promote total human liberation and development. (See Se, Artie ilippine Constitution) aca article] Fe The Philippine Constitution also r and information in nation-buildin; Conditions for exemption of newspaper, magazine review or bulleti 1. They must appear at regular intervals with fixed prices for subscriptio™ 2. The sale must not be devoted Principally to the z su f pai advertisements. Publication of Scognizes the vital role of communicatio® 8: (See Sec. 24 Ibid.) 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 Ilustration 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 aircraft 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. IMPORTATION BY VAT-EXEMPT PERSO) VAT-exempt persons are not subject to VAT on importation. The extent of 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tion Chapter 2- Value Added Tax on Importatio! rtation shall constitute a lien : : impo! importation. The tax due on such imp’ irrespective of the possessor i r liens, goods, superior to all charges or goods (Sec. 4,107-1(c), RR16-2005). ON the of Saiq NIRC: VAT-Exempt Persons under the 1. International shipping or air transport operato 2. Agricultural cooperatives 3. Ecozone-locators International shipping or air transport operators The exemption ‘eilnied 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 wi ultimately be used in international transport. This consumption is a foreign consumption rather than domestic consumption. Mlustration 1 ; Malaysian Ferries is an international shipping 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. Illustration 2 Finoy Airline imported jet fuel from Iraq at a total cost of P50,000,000. 40% of the importation is declared for domestic airline operations while 60% is declared for international air transport operations, 50%6 of the P50,000,000 importation will be consumed in foreign airspaces. Thisis not for domestic consumption; hence, it is exempt fr for de t ‘om VAT. Only the 40% portion which willbe used domestically will be subject to the VAT on importation. , Illustration 3 Lufta Airline, an international air carrier, im j * imported jet fuel at a total cost of P 40,000,000. It subsequentl i a ‘quently sold P10,000,000 of these to a Feel Air, a domesti¢ Agricultural cooperatives The status of agri-coop as VAT-exempt person direct farm inputs, machineries an equipm is limited to importation of Parts (RA 9337) lent, including their spa” 28Chapter 2 — Value Added Tax on Importation Conditions for exemption: 1, The cooperative must be an agricultural cooperati i i } perative duly registered and in good standing with the Cooperative Development Authority (cba). 2. The importation involves direct farm inputs, machineries, equipment and their spare parts to be used directh i in i : ly and exclusivel processing of their produce. Yee 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 for the processing or processing needs of the cooperative is exempt; hence, tractors and threshers are exempt from VAT on importation. 2. 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, The cars are vatable because they are not direct farm inputs, machineries, or equipment. Illustration 2 Assume that fertilizer: y subsequently sold by Abra Farmer's Cooperativi What is the tax consequence of the sale? d as importer and shall be subject to VAT but only to on Jon Juan shall be treatet subject vatable goods such as the herbicides. Since the fertilizer is a VAT-exempt goods, Jon Juan shall not pay VAT on importation thereon. ¢ and herbicides in the foregoing illustration is e to Jon Juan, member farmer. Illustration 3 A credit cooperative imported P1,500,000, This importation is gen exemption does not extend to coopera production. a computer server from abroad at a cost of erally subject to VAT on importation since the tives which are not engaged in processing or 29tation Chapter 2- Value Added Tax on Impo one generator and an ultrafing < nt. The importation is generally Subj te operative. eet Ilustration 4 imported an 0% mining coopera aes + nding machine for its gold recove! HA Diaral @ vA T because the cooperative is not an ag! imported ten tractors and 20 sag Mlustration 5 ; sold four tractors and 5 sacks OF hybig i erative, Arado Coop, a farming coop hybrid seeds. Arado Coop subsequently seeds to Mr. Laco, a cooperative member its it i farm equipment and s T on its importation of fa r f ds to Mr, Laco is not subject to business tax, My Mr. Laco shall be subject to VAT only o Arado Coop is exempt from VA. Its sales of equipment and set Laco shall be considered an importer but the farm equipment but not on the hybrid seeds. Illustration 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., find consumption) shall not be subject to VAT. Likewise, the buyers shall not be subject to VAT on importation. Ecozone-locators Ecozones are designated places of economic activity for the production of goods or services for the export market. By legal fiction, economic zones att considered foreign countries and are deemed outside Customs territoy. Thus, the importation of goods into the economic zones by locators is exempt not only from VAT on importation but also from customs duties. The exemption from VAT covers any goods, supplies or machineries broug into the ecozones by locators, Technical Importation The rules of VAT on importation consumers in a customs territory fro Zones (Sec. 4.107-1, RR 16-2005), apply to technical importation bj m persons located in Special Econom Customs territory refers to th |e Outside of designated special econom ono the Republic of the Philippin® ‘Conomic zones (Ecozones). (RR2-2005) i Purchase of non-Ecozone Philippi® ed foreign toed enterprises, By legal fictio® lence, the purchase !! tories. 1 as but not limited 1 : ; a is subject to the Var on eEeozone, Zambo-Eco2™ rtation. “Technical importation" refers to t] residents from Philippine Ecozone €cozones are consider Economic zones such and Cagayan-Ecozone 30Chapter 2— Value Added Tax on Importation Similarly, sales to Ecozones are sub because Ecozones are considere Illustration 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 dit ti fee nents Sel Bay portation directly to the Bureau of _ rporation is not required to impose the VAT on its sales. However, it must be fur nished a copy of the receipt issued by the BOC for the VAT payment (See BIR Ruling No. DA-031-2007, January 19, 2007). Illustration 2 KT, an ecozone locator, imported two machineries for use in the ecozone. It resold one machinery to $3, 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. IMPOR’ IN 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: en | 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tion Chapter 2 - Value Added Tax on Importatio chased previously, they were alte he VAT on importation apligf Shay Note that when these were Oe TI ubjected to consumption taxes. " Fen iporistions which represent current consumptions of personal, hoy, i st consumptic or professional effects. It does not apply to their past c Pion, Illustration 1 is Mr. Siman was employed abroad as an OFW. He eT joouing eth hig personal effects such as clothes, pieces of perso! ‘ i ve aes Baga aggregating P300,000 in value. When his contract ea led, i med to Philippines bringing with him the same effects which now have an aggreyy, value of P280,000, The importation (i.e, return) of the personal effects will not be subject to Vay since these are past purchases which had been subjected to consumption tax vie purchased in the Philippines. Mlustration 2 While employed abroad, Mr. Siman purchased an iPhone 6 worth P30,000 ir selfie purposes. Mr. Siman brought the iPhone to the Philippines when tis employment contract ended. The importation of the iPhone shall not be subject to VAT on importation forte same reason that it is not a present consumption of household effects when it wa brought into the Philippines. Furthermore, purchases abroad by non-residents at not subject to consumption tax in the Philip pines. Their subsequent importation the Philippines is exempt from VAT on importation, Ilustration 3 Mrs. Kookai Ukay, a Philippine resident, purchased used we clothing and sh Patt oie 00 fom abroad to be sold in her “Ukay-ukay” sales catlts int Philippines. She reserved P50,000 of these for her personal use. The entire P300,000 purchase of goods from abroad ; a , p I ‘oad i i rm subject to the VAT on importation. This rule applies without ani rhe 7 im ofthe importation whether for business or for persoyen ae eae Illustration 4 Mrs. Lovely Bulalo, a non-resident Filip ' * ; i her business in France. She decommissione it nesswoman, owns a machi her business in the Philippines, he machine to be transferred” Although the machine is a past fore; a to the Philippines is subject to fareign aun iPtion, the importation of the 5%, s be Personal, professional or household effeata «°° VAT-exemption 1s limited Of)” 32Chapter 2— Value Added Tax on Importation Illustration 5 An I nay non-profit organization based in Switzerland sent goods inten er lonation to victims of flood in the Philippines. The goods consist of various household effects, grocery goods and rice. The npr Of these donated goods into the Philippines is subject to VAT, except for the rice ~ a VAT-exempt goods. These imported donations are exempt from 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. Mlustration 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. Ilustration 2 Mr. Kung Fu, a Chinese martial arts master, arrived in the Philippines with an 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 1 piece of used laptop 30,000 1 piece of used iPhone 45 20,000 1 piece of used calculator 400 Used clothes, apparel and travelling bag 7,000 tor, clothes, and apparel are apparently TI I ), iPhone 45, calcula sonal effets whi hence, these are exempt from VAT. personal effects which are past consumptions; The nature and quantity of the iPhone 6, IBM laptops and desktop computers is clearly inconsistent with the concept of personal effects. These items are unquestionably for domestic consumption; hence, subject to VAT. 33tion Chapter 2 Value Added Tax on Importal ten aba Mrs. Waca bought a car and eared jew ty her salaries as OFW. She intended to sell ben iie Mest Waca pent ay townsfolk in the Philippines. When her contra | ro the car and the jewelry to the Philippines: , The importation of the car is vatable since it isnot phate eae ion pieces of jewelries are in commercial quantity whi cleary personal items; hence, vatable. RTAT TREA’ Import that are exempted by special laws, treaties or internatigy, agreements to which the Philippine government is a signatory is not subje, to the VAT on importation. THE VAT ON IMPORTATION Other importation of goods is subject to VAT regardless of whether the: 1. importer is engaged or not engaged in trade or business 2. importer is a VAT or non-VAT business 3. importation is for business or personal use 4. non-resident seller is engaged or not engaged in business As a consumption tax, the VAT on importation applies without regard toth purpose of the importation and whether or not the sellers or buyers an engaged in business. Presumption of vatability Importation is generally subject to VAT unless it can be proven as exemp under any of those conditions discussed herein or under a provision of: Special law or treaty. The burden of proof in establishing VAT exempta rests upon the importer. Tax basis of the VAT on importation / The VAT on importation is computed as 12% of the total landed cost ofth 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 b. Brokerage fee ewe charge c. Arrastre charge Damage due d. Wharfage due &- Documentary stamp tax 5 - Import Processing feesChapter 2 - Value Added Tax on Importation Se ae nae costs encompass all costs of importation incurred prior to the ‘awal of the goods from the warehouse of the Bureau of Customs, except unofficial or illegal payments made. 2 Cee sso called transaction value, refers to the total value us 1u of Customs in determining i 7 See eae g customs duties, such as: 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 Illustration 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 P5,000 facilitation fee paid to a fixer 85,000 Customs duties 10% Freight of goods from BOC warehouse to 20,000 MRS warehouse in Makati City 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 7 Dutiable value P 2,070,000 Rate of duty 10% Customs duties P__207,000 The VAT on importation shall be computed as: Dutiable value P 2,070,000 Other official costs paid before withdrawal of goods soto from the BOC 4 Customs duties eee Total landed cost P 2; 00 Multiply by: VAT rate — 12% P__282,840 VAT on importation 35tion Chapter 2 - Value Added Tax on Importa Ilustration 2 ~ comprehensive . Mang Pandong imported a sp following shows details of the charges ts car from the US for persona, ir Use, of the importation: y $ 50,000 Purchase price 500 Insurance in transit ___800 Freight $__51,300 Total invoice price ——_ ‘otal invoice pri > Beno Arrastre 6,000 Bank charge 800 Wharfage dues 90,000 Brokerage fee 265 Custom’s documentary stamp 5 Import processing fee —___250 Total other charges P___105,815 The relevant exchange rate per Bureau of Customs Memorandum Circular 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 b_692.550 The landed cost and value added tax are computed as: Dutiable value Pp 230 Excise tax 683510 Other charges i Landed cost P Multiply by: VAT rate on import 3.790.375 VAT on importation > L2H Paid to the B it by the BOC. © éreau of Customs (BoC) using a form prest™ IMPORT OF SERVICES The purchase of services from i 1. VAT-exempt Nonresidents may be; 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 witl i when it is exempted or is fs eS a cate 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 tax. The VAT is deemed impo: this purpose, the law conclu: are engaged in bu: views the final withholding VAT as a business sed upon non-resident service providers. For sively presumes that the non-resident sellers 'siness 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 if: 1. the service is rendered within the Philippines; and 2. the payor-purchaser of the service is an individual engaged in business or a 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. apis Const help of Mr. Putin, a repairman doing business in Eagle Company sought the help of Mr. Putin, ; man ¢ Astral iB fix its malfunctioning machinery in the Philippines. The contract price was P1,000,000. Eagle Company shall pay P120,000 (12% x P1M) final withholding VAT to the BIR. quer 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Ny Chapter 2 — Value Added Tax on Importation / if i -profit institution? The contract price, / 2. What if Eagle Company is a non-pro! . af subject to the 12% final withholding VAT. Even non-profit Corporations yt required to withhold. / 3. What if Eagle Company is an ecozone locator? The contract price Will not by subjected to the 12% final withholding VAT because ecozone locators outside the country (i.e. non-residents) by legal fiction. Mlustration 2 Q Mr. Wong, a resident travelling sales agents, asked the assistance of Mr. Ten, ian Ba Chinese national doing business abroad, to 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 pricei 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 on) for individuals engaged in business. VAT-EXEMPT IMPORT OF SERVICES The following are exempt from the final withholding VAT: a. Purchase of services from non-residents when the service is rendered abroad b. Purchase of services from non-residents whet I rvices | n the individual purchastt is not engaged in business c. Purchase of services from non-residents by VAT-exempt persons such ecozone locators In case the service is rendered by non-residents the i r ' : to ecozone locators, final withholding VAT is not imposable since ecozone locators #* considered non-residents. The withholding requirement cannot be impos with non-residents. Hence, the transaction shall be exempt from the fir! withholding VAT. (See BIR ITAD Ruling Nos. 311-14 dace ber 4, 20 and 316-14 dated November 24, 2014) dated November 4, IMPORT OF SERVICES SPECIFICALLY sup, : , EC The only import of service that is current, BuO ERCENTAGE cs iste direct acquisition of insurance cover from ‘aby 0 a percentage tax on insurance policies directly sour, road. The premium pay ced C. tax. The policyholder shall pay the came eat Fsublect to a 5% percent 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 Illustration 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 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. Ilustration 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 P__144,000 39ON Chapter 2 - Value Added Tax on Importation Phil Mines shall likewise pay the following final withholding VAT to the Bip. / Installation service contract price P_— 220,000 Multiply by: Final withholding VAT B__26,400 The customization service by Guangzu Industries is not subject to fj since the service is done abroad. The installation service is subject withholding VAT since it is done within. inal Vay 10 tng Payment of the withholding VAT Using BIR Form 1600, the withholding VAT is remitted monthly on or Defore the 10% day of the following month after the withholding was made, ex for taxes withheld for December which shall be filed or paid on or before January 25 of the following year. Treatment of the VAT on importation and the Withholding VAT 1. If the resident purchaser is a VAT-registered business, it can claim the VAT on importation or withholding VAT as input VAT creditable agains its output VAT. 2. If the resident purchaser is a non-VAT business, the VAT on importatin or final withholding VAT shall be part of the cost of purchase of goods«r services and shall be treated as asset or expense. 3. If the purchaser is not engaged in business, the VAT on importation is merely added to the costs of the goods imported. 40Chapter 2 - Value Added Tax on Importation CHAPTER 2: ELF-TEST EXERCISES Discussion Questions heey eN ane eDEe What is importation? Is VAT on importation a business tax? Explain. Whatis the nature and scope of the VAT on importation? Enumerate the list of exempt importations. What is meant by the phrase “in origit ate” ‘iginal state"? What is landed cost? oe 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. ae the treatment of the VAT on importation and the final withholding True or False 1 1. The VAT on importation is a business tax. 2. The final withholding VAT is a business tax. 3. The VAT on importation is 12% of the value added on importation. 4, The VAT on importation is 12% of the receipts from the sale of services abroad. 5. Importation is subject to either VAT or percentage tax. 6. The final withholding VAT is 12% of the contract price of purchased services from within the Philippines. 7. The sale of services abroad is subject to 12% final withholding VAT. 8. The VAT on importation is paid to the Bureau of Internal Revenue. 9. The final withholding VAT on services is paid to the Bureau of Internal Revenue. 10. The importation of any agricultural or marine products is VAT exempt. 11, The importation of professional instruments and implements is exempt from VAT. 12. The importation of any product intended for human consumption is VAT- exempt. 13, The importation of ingredients which are intended for the manufacture of goods for human consumption is VAT-exempt. ; ; 14. The importation of professional instruments and implements in commercial quantities is VAT-exempt. ; | 15. The importation of equipment, machinery and spare parts for marine vessels is VAT-exempt. True or False 2 | 5 1. Resident foreigners are not subject to the VAT on importation. 2. Allagricultural or aquaculture inputs are VAT-exempt. 3. The sale of processed agricultural products is vatable. 41ition Chapter 2 ~ Value Added Tax on Importati i '-exempt. 4, ‘The importation of books and Lia cat aid 5. The importation of life-saving equipment IS T= Ske ceempt ned 6. The lease of aircrafts or vessels from non they withholding VAT. 7. The purchase of services from 8. Tae ape of fuel, goods, and supplies by international cates exempt. . 9. The imporration of agricultural machineries by eee is eee 7 10. The importation of agricultural machineries by agricultural Cooperatives, VAT-exempt. Heariaass 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 those not engaged in business. ; 13. The VAT on importation and the final withholding VAT can be claimed Input VAT creditable against Output VAT. 14. In economic reality, the VAT on importation and the final withholding Vit are taxes paid by non-resident sellers. 15. Qualified exempt importation is exempt from VAT only if made bya exempt person. foreign consultants is exempt fron Multiple Choice: Theory - Agricultural or marine food products: Part 1 1. Which is subject to value added tax? a. Sheep c.Cut sheep meat b. Sheep wool 4. All of these 2. Which agricultural product is VAT-exempt on importation? a. Charcoal c. Lumber b. Wood 4. Corn 3. Which importation is subject to VAT? a. Importation from abroad b. Purchase of goods from economic zones ‘lippi aa noteseots nes in the Philippines d. Neither A nor B 4, Which is not subject to VAT a. Importation of goods fo: b. Importation of goods for ©. Purchase of goods from d. Purchase of goods from on importation? personal use business use Ecozone entities other domestic sellers 5. Which of the following is. subj 2 imported? subject to the vaT on importation a. Books ©. Mushrog b. Table sugar mn 4. 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 ho; . Bs b. Eggs d, Cattle 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 c.Copra 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 43, Which is subject to VAT on importation? a. Wheat c. Barley b. Coffee bean d. Cocoa 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 All of these mpt from VAT on importation. c. Palm oil tree d. Mahogany tree 16. Seedlings of this tree are exe a. Rubber tree b. Paper tree 43Chapter 2 — Value Added Tax on Importation a 2 17. Which of the following when imported is subject to VAT? a. Rubber ¢.Gacao b. Corn 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 d. Broiler feeds 20. Feeds of the following animals are considered as specialty feeds, except fo a, Zoo animals c. Livestock b. Aquarium fish d. Fighting cocks Multiple Choice: Theory - Agricultural or marine food products: Part 2 1. Which is VAT-exempt? a. Peacock feathers c. Hamsters b. Eggs 4. Leather 2. Which is vatable on importation? a. Tealeaves ¢. Cayenne pepper b. Tobacco leaves d. 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 ¢. Peanuts b. Beeswax 4d. None of these 5. Which is not generally considere: a. Rabbits b. Zoo animals as pet under the regulation? ¢. Race horses . 4. Fighting cocks 6. Which of these is non-vatable? a. Lovebirds ©. Goldfish b. Parrots a. Milkfish 7. Which is nota VAT-exempt poultry? a, Ducks oT b. Geese ad 4. Game fow! Toosters 44Chapter 2 — Value Added Tax on Importation 8. 10. 11. 12. 13. 14, 15. 16. 17. 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 c. Seeds b. Pesticides d. Seedlings The following are generally considered as pets which are vatable when imported except for a. Janitor fish ©. Catfish b. Goldfish 4. 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 c.Sea 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 B.Oysters C.Lobsters. —_—D. Clams Which of these is subject to VAT on importation? a AandD c.Alll 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 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tion Chapter 2 — Value Added Tax on Importatio le with VAT? a s taxa tra-packed fresh fruit juice Jes d, Canned fruits 18. Which of the items below i a. Shrink-wrapped meat b. Vacuum-packed vegetabl ing? 19. Which is not considered as simple processing: a. Freezing c.Broiling b. Stripping d. Marinating 20. The following advanced technological means of packaging are deemed a to alter the nature of agricultural marine food products thereby Tetaiing 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 c. Importation of magazines d. All ofthese 2. Which importation is not VAT-exempt? a. Importation of personal and household effects of residents coming resettle in the Philippines b. Importation of personal and household effects of foreigners coming'0 settle permanently in the Philippines ¢. Importation of personal and household customs duties d. Allofthese effects which are subject 0 3. The importation of professional instruments and j ay be subject to VAT when the and implements may a. volume is not in commercial B. goos accompany the person a i Sean within 30 days before or ce AT involves vehicles and machineries. 4, wale importation is exempt from VAT? Importation of books by a school b. Importation of books bya student c. Importation of books b 4. Allofthese Yabookstore 46Chapter 2 — Value Added Tax on Importation 5. 10. 11. The importation of which transport medium is exempt from VAT? a. Seaorair A b. Land a rai ® Examples of Transport vehicles: A. Bus B.Cars C.Vessels D. Aircraft Which of these is not exempt from VAT when imported? a. CandD c.All of these b. AandB d. None of these 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 Bor C 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 c. Household effects d. Personal effects ‘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 d. Any of these 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 ‘The importation of vessel or aircraft for domestic operations is a. vatable. b. always VAT exempt. ¢. VAT exempt if the importer complies with maximum service life set by law. d._ vatable if the importer complies with maximum service life set by law. 47ation Chapter 2 - Value Added Tax on Import lies for domestic shippin 12, The importation of fuels, goods and SUPP 8 OF ap transport operations is a. vatable. b. always VAT exempt. c. _vatable if the importer is @ d. VAT-exempt if the importer domestic carrier. | is a domestic carrier. 13. The importation of farm machineries and equipment is exempt wh,, imported by i a. amember ofa cooperative. b. atrader engaged in business. c. anagricultural 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 by a cooperative of farm equipment b. Importation by a cooperative of rice c. Importation of books d. Importation of marine food products 16. Which is not a qualified exempt importation? a. Importation of fuels or supplies by a Person engaged in domestic transport operations b. Importation of fuels or supplies by an international carrier ¢. Importation of cargo vessels and aircraft b i tho: jomesti¢ transport operations Cereeros ce d. Importation of cargo vessels i sf and ait in international transport operation reraft by those engaged is 17. Which of these is non-vatable? a. Purchase of services fro) m | ; ig mot engaged in business * reign service provider who i ™ b. Purchase of goods from af ‘ business abroad orelgn service provider who is engage!” c. Purchase of goods from e conom; 6 Purchase of ‘nomic zone enterprises 18. Who shall pay the VAT on i : import til subsequently sells an imported artinie sto" When a VAT: exem a. The exempt buyer °F B00ds to a non-exempt enti”? b. The non-exempt buyer ¥ c Both AandB 48Chapter 2 ~ Value Added Tax on Importation d. Neither Anor B 19. Importation is not subject to VAT when a, made by a VAT-registered business. b. made by a non-VAT-registered business. ¢. itinvolves exempt goods, 4. 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? Purchase price All incidental cost of bringing the goods to the Customs warehouse Taxes other than VAT paid prior to the withdrawal of the goods Cost of transporting the goods from the Customs warehouse to the importer’s warehouse or residence Boop 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 P__440,000 What is the amount of taxable importation? a PO c, P200,000 b. P120,000 d. 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. P41,472 d. P48,000 3. A bookstore company imported the following items: Landed cost Books P 350,000 i 200,000 Professional instruments , School supplies 350,000 Total P_900,000 49Chapter 2 - Value Added Tax on Importation i ion? What is the total VAT on importation? c.P72,000 b ceo .P108,000 4, Mr.C,a VAT-registered food retailer, imported the following from China, Landed cost Fruits P 250,000 Vegetables vende Frozen meat Q Marinated milkfish ——100.000 Total P__580,000 Compute the VAT on importation. a PO c.P51,600 b. P 12,000 d. P 69,600 5. Alexis Furnitures, a percentage taxpayer, imported the following househo equipment: lec Machineries, for business use P 1,150,000 Heating system, for home use ——250,000 Total 21,400,000 Compute the VAT on importation. a PO c.P 150,000 b. P 27,000 d.P 168,000 6. Danes AgriCorp imported the following: Landed cost Seeds P 400,000 Fertilizers 750,000 Farming equipment 450,000 Herbicides and pesticides "7 Compute the VAT on importation, a PO ©.P 72,000 b. P42,000 4.P 84,000 Home Appliance Company imported the following for Personal use: Furniture Rattan P 600,000 Lumber 250,000 450,000 SOChapter 2 — Value Added Tax ‘on Importation Compute the VAT on importation, a. P30,000 c.P 156,000 b. P-72,000 d.P 204,000 8. Mr. Huligan i i i is i i Mr. Holi an imported rice from Vietnam. Details of his importation show 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 c.P 126,000 b. P120,000 d.P 128,400 9. An agricultural supply dealer imported the following: Corn grits P 200,000 Hog feeds 350,000 Specialty feeds 300,000 Compute the VAT on importation. a PO c. P42,000 b. P36,000 4. 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. P 120,000 c. 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. P145,200 d.PO 51oN Chapter 2 - Value Added Tax on Importation 2. In the immediately preceding problem, assuming that the impor . . tation made by an agricultural cooperative, what is the VAT on importation" ® a P158,400 cP 129,600 b. 144,000 a.P0 3. Mr. Smile, a professional practitioner, imported the following: Calculators and computers for his firm P 900,000 Books —— 600,000 Total P.1,500,000 How much is subject to VAT on importation? a PO c.P 1,200,000 b. P-900,000 4.P 1,500,000 4. Mr. Juan Manuel Marquez arrived in the Philippines with an immigration visa. He had with him the following: Clothing, shoes, and apparel P- 100,000 Professional instruments and implements 150,000 Personal car 300,000 Total costs of personal belongings P_550,000 Compute the total amount subject to VAT on importation. a PO c. P 300,000 b. P200,000 4.P 550,000 5. Mr. Xhi, a non-VAT taxpayer, made the following domestic purchases of goods: Purchase of scrap metals from a PEZA-locator P 200,000 Purchase of machine from a VAT supplier 800,000 What is the imposable VAT on importation? a PO ¢.P.96,000 b. P24,000 d.P 120,000 6. Atlantis Shipping Company imported P 3,000,000 sand 7 900,000 we f vessel fuel supplies for domestic use. The company carmel) r6D%6 of this domestic use while 40% was reserved for its international operations. What is the VAT on importation? a ©.P 216,000 b. P144,000 4.P 360,000 82Chapter 2 — Value Added Tax on Importation 7. Mey Beer, a VAT registered trader, imported equipment with a dutiable pt $40,000 from abroad. The importation was subject to P100,000 BOC charges before 10% customs duti i rate tothe Pes ene 036 customs duties on dutiable value. The exchange Compute the VAT on importation, a. P 218,400 ©. 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 c. P 35,280 b. P 18,960 d. 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: — P4000 Freight 7000 Wharfage fee Faia Arrastre charge in Brokerage fee 5000 Facilitation fee also assessed P 24,000 and P 18,000, respectively, for Mr. Dolinger vier a excise tax. The applicable exchange rate was P42.50:S1. customs duties an tis the VAT on importation? ws 25,500 c.P35,100 b. P 30,540 d.P.35,700 53