Question

Output and Input VAT

Gerard Pascual is a VAT registered person. His total sales before VAT is 125,000. His purchase invoices from other VAT registered businesses amounted to 84,000.

Compute for the following:

1.Output VAT

2. Input VAT

3. VAT payable

Answer the following and explain!
(Taxation in Philippines)

Answer 1

VAT is value added tax is a form of sales tax which is levied on the sale, barter, exchange of goods and services. It is an indirect tax and the amount of VAT maybe shifted to the buyer of goods/services.

The VAT paid on purchases is called input VAT.

The VAT added on sales is called is called Output VAT.

In Computing the VAT payable Creditable input tax is deducted from Output tax from sales.

The VAT rate in Philippines is 12%. Hence,

1. Output VAT - 12% of 125,000 = 15,000

2. Input VAT - 12% of 84,000 = 10,080

3. VAT Payable = Output VAT - Input VAT = 15,000 - 10,080 = 4,920