BUISENESS MANAGEMENT
TAXES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A seller of agricultural food products is vat exempt. His annual gross sales in 2018 amounted to P3, 000, 000. To what business tax is he liable?
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3% tax on vat-exempt persons
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12% value-added tax
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3% common carrier’s tax
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none of the above
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Explanation:
Detailed explanation-1: -3% is the general base rate of Percentage Tax on gross sales and receipts for standard non-VAT registered businesses.
Detailed explanation-2: -Vatable Sales = Total Sales/ 1.12. VAT = Vatable Sales x 1.12.
Detailed explanation-3: -For example, a doctor’s surgery won’t be able to reclaim VAT on its accountancy fees, because services provided by a doctor are exempt from VAT. If your business only makes VAT exempt sales, it’s not allowed to register for VAT. Don’t get confused between zero-rated VAT and VAT exempt sales.
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