Value Added Tax

VALUE ADDED TAX
Is a percentage tax, imposed at every stage of the distribution process on the sale, barter, exchange (including transactions deemed by law as a sale), or lease of goods or properties or rendition of services in the course of trade or business, or the importation of goods.
CONCEPT OF VAT
The value added tax is a tax levied on a wide range of goods and services. It is a tax on the value, added by every seller, with aggregate annual sales of articles and/or services, exceeding P550,000 to his purchase of goods reported and services unless exempt. The VAT is computed at the rate of 0% or 12% of the gross selling price of goods or gross receipts realized from the sale of services.

Tax Base of VAT
The tax is based on the gross selling price or gross value in money of the goods or properties sold, bartered, exchanged or the gross receipts derived from the sale or exchange or services, including the lease of goods or properties, or in the case of imported goods, on the total value or landed cost thereof plus taxes and other charges, if any.

NATURE OF THE VAT
1. It is a privilege tax imposed by law directly not on the thing or service but on the act (sale, barter, exchange, or lease of goods or properties, importation of goods, or sale or performance of services) of the seller, (manufacturer, producer, wholesaler or retailer, transferor, importer or lessor who is made liable for its timely payment although the burden of the tax is borne by the ultimate consumer.
2. It is an ad valorem tax, the amount or sale thereof being based on the gross selling price or gross value in money of the goods or properties, or gross receipts derived from the performance of services, including the use or lease of properties.
3. It is an indirect tax- as such, it may be shifted or passed on to the buyer, transferee, or lessee of the goods, properties or services as part of the purchase price.