INPUT TAXES

Input VAT Credits and Refunds

INPUT VAT CREDITS OR INPUT TAX
CREDITS

VAT due from or paid by a VAT-registered person in the

course of his trade or business on local purchase of goods
or services, including lease or use of property from a VAT-
registered person.

it also includes VAT imposed on importation of goods or

services.
 The output VAT of the VAT-
registered seller becomes the
input VAT of the VAT-
registered buyer.
INPUT VAT
CREDITS OR
INPUT TAX
CREDITS If the latter sold the goods,
he can reduce the related
output VAT of his sales by the
input VAT from his purchases.
 1 2 3 4
It is primarily intended to It is creditable against the At the end of any taxable If the input VAT, inclusive of
reduce the amount of output output VAT if the related period, if the output VAT input tax carried over from
VAT in computing the VAT goods or service from which exceeds the input VAT, only the previous quarter(s)
payable for the taxable it arises are used in the such excess amount is exceeds the output VAT, the
period. conduct of business. payable by the taxpayer to excess input VAT shall be
the BIR. carried over to the
succeeding quarter or
quarters or may be applied
for tax refund.

FUNCTIONS OF INPUT VAT

 1. Proper documentations.
RULES FOR 2. Delivery receipts not allowed.
CREDITABLE 3. No double input tax credit is allowed.

INPUT VAT 4. Ignore erroneous VAT rate.

5. Allowed by law as creditable input VAT.
 Purchases of goods/ properties or services
from other VAT-registered business;

Purchases of goods or services which are

otherwise exempt from VAT but the seller
issued a VAT invoice or receipt;

Importation of goods (for business use or local

SOURCES OF sale);

INPUT VAT Transitional input VAT;

Presumptive input VAT;

Standard input VAT on sales to the

government.**
PURCHASES OF GOODS/PROPERTIES
OR PAYMENT OF SERVICES
The input VAT element could be claimed as tax credit
against output VAT if:
 It is evidenced by VAT invoice or Official Receipt
 The purchase or importation is:
 Intended for sale in the course of business;
 For the conversion into finished products for sale including packaging materials;
 For the use of supplier in the course of business; and
 For use in business for which deduction for depreciation or amortization is allowed under
this Code.
 The purchase of services, lease or use of properties is in the conduct
of business; provided that, the input VAT is creditable to the
purchaser, lessee, or licensee upon payment of the compensation,
rental, royalty or fee.
 INPUT VAT ON Capital goods or properties are
goods or properties with estimated
DEPRECIABLE useful life greater than one year,
used directly or indirectly in the
CAPITAL GOODS production or sale of taxable goods
or services.
 All importations of goods in the Philippines
are subject to VAT, whether or not intended
for business, except those mentioned under
Sec. 109 of NIRC.
The VAT is 12% on the value used by the
Bureau of Customs in determining the tariff
INPUT VAT ON and custom duties, plus custom duties and
excise taxes, if there are any, and other
IMPORTATION charges to be paid by the importer prior to
the release of such goods from the custody
of the BOC.
Where the custom duties are determined on
the basis of the quantity or volume of the
goods, the value-added tax shall be based
on the landed cost plus excise taxes, if there
are any.
 TIV is allowed on the inventory
on hand of a person who, for
the first time becomes liable to
VAT or elects to be VAT-
registered.

The TIV is equivalent to 2% of

TRANSITIONAL the value of such inventory or

the actual input VAT paid on
such inventory, whichever is
INPUT VAT higher, which shall be
creditable against the output
VAT.

Goods exempt from VAT shall

be excluded in the computation
of transitional input VAT.
PRESUMPTIVE INPUT VAT

PIV is an amount allowed by the Tax Code as input

tax on purchases of a VAT-registered person despite
that there is no actual VAT payment made on VAT-
exempt transactions.
The PIV is 4% of the purchases of VAT-exempt primary agricultural and
marine food products at their original state which are used as inputs to
the processing of:
 Sardines, mackerel;
 Milk; refined sugar;
 Cooking oil; and
 Packed noodle based instant meals.

PRESUMPTIVE INPUT VAT

A VAT-registered person’s creditable input VAT during the taxable month or
quarter shall be:
1. Increased by any input VAT carried over from the preceding
month or quarter.
2. Reduced by the following:
a. Amount of the claim for refund or tax credit for VAT filed
during the same period, and
b. Other adjustments, such as purchase returns or
allowances and input tax attributable to exempt sales
and unamortized input VAT of depreciable capital
goods.
c. Amount of input VAT corresponding to uncollected portion
of installment receivable in installment sales.
For real property bought on installment, the creditable
input VAT allowed for the buyer should correspond to the
VAT of the installment payments.

ADJUSTMENTS TO INPUT VAT

CREDIT
INPUT VAT OF ZERO-RATED
PERSON
Any input VAT attributable to the zero-
rated or effectively zero-rated sales by
a VAT-registered person may at his
option be applied for (a) tax refund or
(b) issuance of tax credit certificate
(TCC) which may be used in the payment
of internal revenue taxes, subject to the
following conditions:
 THE TAXPAYER IS VAT- THE CLAIM IS MADE WITHIN
REGISTERED; 2 YEARS AFTER THE CLOSE
OF THE TAXABLE QUARTER

INPUT VAT OF WHEN CLAIM WAS MADE;

ZERO-RATED
PERSON
THE CREDITABLE INPUT TAX IN CASE OF ZERO RATED
MUST BE ATTRIBUTABLE TO SALES, THE ACCEPTABLE
THE ZERO-RATED OR FOREIGN CURRENCY
EFFECTIVELY ZERO-RATED EXCHANGE PROCEEDS
SALES, NOT TRANSITIONAL THEREOF HAD BEEN DULY
INPUT TAX (OR PIV), AND ACCOUNTED FOR IN
NOT YET APPLIED AGAINST ACCORDANCE WITH BSP
THE OUTPUT VAT; AND RULES AND REGULATIONS.
Allowed for VAT Refund or Tax Credit Certificate
The following VAT-registered taxpayers are allowed by
law to apply for VAT refund or issuance of TCC to the
extent that such input VAT has not been applied against
output VAT:
 Those with zero-rated and effectively zero-rated sales, and
 Those who would be cancelling their VAT registration.

VAT REFUND OR TAX CREDIT

CERTIFICATE
Not Allowed for VAT Refund or Tax Credit Certificate
1. Presumptive input VAT
2. Transitional input VAT
3. Actual input VAT on capital goods, importation, or
purchases of continuing VAT-registered persons to the
extent of their sales not subject to zero-rated,
effectively zero-rated or business cancelling their VAT
registration.

VAT REFUND OR TAX CREDIT

CERTIFICATE
VAT REFUND OR TAX CREDIT
CERTIFICATE
Not Allowed for VAT Refund or Tax Credit Certificate
The VAT-registered taxpayer may use these input taxes
as (a) direct tax credit against his output VAT due and (b)
carry-over any excess input VAT to the succeeding
quarters for application against its future output VAT
liabilities.
All purchases covered by invoices other than a VAT
invoice shall not be entitled to a refund of input VAT.
No refund of input VAT shall be allowed unless the VAT-
registered taxpayer filed an application for refund with
respondent Commissioner within 2 year prescriptive
period.
 A VAT-registered person may apply for
TAX CREDIT input VAT refund or issuance of TCC within 2
years after the close of the taxable quarter
CERTIFICATE when the sales were made.

OR VAT In proper cases, the Commissioner shall grant

a refund or issue the TCC for creditable
REFUND input taxes within 120 days from the date
of submission of complete documents to
PERIOD support the application of VAT refund or
TCC.
END.