TAXN03B – Transfer and Business Taxes

Seatwork # 1 for Finals

Prepared by Lex Daniel S. Quequegan, CPA

THEORIES:

1. What are the requisites for taxability of sale of goods and personal properties?
2. What are goods subject to VAT?
3. Are gross receipts derived from sales of admission tickets in showing motion pictures
subject to VAT?
4. What are the requisites for taxability of sale or exchange of real property?
5. What is the threshold amount in determining whether the sale or real property is subject
to VAT?
6. What is Gross Selling Price?
7. What are the allowable deductions from the gross selling price?
8. What is the gross selling price in case of sale or exchange of real property?
9. What is the difference between “zero-rated” and “VAT-exempt” transactions?
10. When is export sale exempt and when is it zero-rated?
11. Is the sale of goods to ecozone, such as PEZA, considered as export sale?

CASES:

I.

Cebu Toyo Corp., an export enterprise, is a subsidiary of a foreign corporation duly

registered with the Philippine Economic Zone Authority pursuant to PD 66 and is also registered
with the BIR as a VAT taxpayer. It sells 80% of its products to its mother corporation, and the rest
are sold to various enterprises doing business in the Mactan Export Processing Zone. Inasmuch as
both sales are considered export sales subject to VAT at 0% rate under the National Internal
Revenue Code, as amended, it filed an application for tax credit/refund of VAT paid for the said
period representing excess VAT input payments. The CIR belies the claim for refund. Is the grant
of a refund representing unutilized input VAT to Cebu Toyo proper?

II.

SEAGATE is a resident foreign corporation duly registered with the SEC to do business in
the Philippines. It is also registered with the PEZA to engage in the manufacture of recording
components primarily used in computers for export. SEAGATE is a VAT-registered entity. An
administrative claim for refund of VAT input taxes in the amount of P28,369,226.38 with
supporting documents was filed with Revenue District Office in Cebu. The administrative claim
for refund was not acted upon by the petitioner prompting the respondent to elevate the case to the
CTA. The CIR contended that since ‘taxes are presumed to have been collected in accordance with
laws and regulations, Seagate has the burden of proof that the taxes sought to be refunded were
erroneously or illegally collected. Unfortunately, Seagate failed to do so. Is Seagate entitled to the
refund or issuance of Tax Credit Certificate representing alleged unutilized input VAT paid on
capital goods purchased?