Article 47p. 47

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

(i) For sale; or

(ii) For conversion into or intended to form

part

of

a

finished

product

for

sale

including packaging materials; or

(iii)

For use as supplies in the course of

business; or

(iv)

For use as materials supplied in the

sale of service; or

(v)

For use in trade or business for which

deduction for depreciation or amortization

is allowed under this Code. [65]

(b)

Purchase

of

services

on

which

a

value-added tax has been actually paid.

(2)

The

input

tax

on

domestic

purchase

or

importation

of

goods

or

properties

by

a

VAT-registered person [66] shall be creditable:

(a)

To the purchaser upon consummation of

sale and on importation of goods or properties;

and

(b)

To the importer upon payment of the

value-added tax prior to the release of the

goods

from the custody of the Bureau of

Customs.

Provided, That the input tax on goods purchased or

imported in a calendar month for use in trade or

business for which deduction for depreciation is

allowed under this Code shall be spread evenly over

the month of acquisition and the fifty-nine (59)

succeeding months if the aggregate acquisition cost

for

such

goods,

excluding

the VAT component

thereof, exceeds One million pesos (P1,000,000):

Provided, however, That if the estimated useful life of

the capital good is less than five (5) years, as used for

depreciation purposes, then the input VAT shall be

spread over such a shorter period: Provided, further,

That the amortization of the input VAT shall only be

allowed

until

December

31,

2021

after

which

taxpayers with unutilized input VAT on capital goods

purchased or imported shall be allowed to apply the

same as scheduled until fully utilized: Provided,

finally, That in the case of purchase of services, lease

or use of properties, the input tax shall be creditable

to the purchaser, lessee or licensee upon payment of

the

compensation,

rental,

royalty

or

fee. (as

amended by RA No 10963)

(3) A VAT-registered person who is also engaged in

transactions not subject to the value-added tax shall

be allowed tax credit as follows:

(a)

Total

input

tax

which

can

be

directly

attributed

to

transactions

subject

to

value-added tax; and [68]

(b) A ratable portion of any input tax which

cannot be directly attributed to either activity.

The term " input tax " means the value-added tax

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

course of his trade or business on importation of

goods

or

local

purchase

of

goods

or

services,

including

lease

or

use

of

property,

from

a

VAT-registered

person.

It

shall

also include the

transitional input tax determined in accordance with

Section 111 of this Code.

The term " output tax " means the value-added tax

due

on

the

sale

or lease of taxable goods or

properties or services by any person registered or

required to register under Section 236 of this Code.

(B) Excess Output or Input Tax. [69] - If at the end of any

taxable quarter the output tax exceeds the input tax, the

excess shall be paid by the Vat-registered person. If the

input tax exceeds the output tax, the excess shall be

carried

over

to

the succeeding quarter or quarters.

Provided, however, That any input tax attributable to

zero-rated sales by a VAT-registered person may at his

option be refunded or credited against other internal

revenue taxes, subject to the provisions of Section 112.

(C) Determination of Creditable Input Tax. - The sum of

the excess input tax carried over from the preceding

month or quarter and the input tax creditable to a

VAT-registered

person

during

the

taxable month or

quarter shall be reduced by the amount of claim for

refund

or

tax credit for value-added tax and other

adjustments, such as purchase returns or allowances and

input tax attributable to exempt sale.

The claim for tax credit referred to in the foregoing

paragraph shall include not only those filed with the

Bureau of Internal Revenue but also those filed with

other

government

agencies,

such

as

the

Board

of

Investments and the Bureau of Customs.

SEC. 111. Transitional/Presumptive Input Tax Credits. -

(A) Transitional Input Tax Credits. - A person who

becomes liable to value-added tax or any person who

elects to be a VAT-registered person shall, subject to the

filing of an inventory according to rules and regulations

prescribed

by

the

Secretary

of

finance,

upon

recommendation of the Commissioner, be allowed input

tax on his beginning inventory of goods, materials and

supplies equivalent to two percent (2%) [70] of the value of

such inventory or the actual value-added tax paid on such

goods, materials and supplies, whichever is higher, which

shall be creditable against the output tax.

(B) Presumptive Input Tax Credits. - Persons or firms

engaged in the processing of sardines, mackerel and

milk, and in manufacturing refined sugar and cooking oil,

shall be allowed a presumptive input tax, creditable

against the output tax, equivalent to four percent (4%) [71]

of the gross value in money of their purchases of primary

agricultural products which are used as inputs to their

production.

As used in this Subsection, the term ' processing ' shall

mean

pasteurization,

canning

and

activities

which

through physical or chemical process alter the exterior

texture or form or inner substance of a product in such

manner as to prepare it for special use to which it could

not have been put in its original form or condition.

SEC. 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. - Any

VAT-registered person, whose sales are zero-rated or

effectively zero-rated may, within two (2) years after the

close of the taxable quarter when the sales were made,

apply for the issuance of a tax credit certificate or refund

of creditable input tax due or paid attributable to such

sales, except transitional input tax, to the extent that such

input tax has not been applied against output tax:

Provided, however, That in the case of zero-rated sales

under Section 106(A)(2)(a)(1), (2) and (b) and Section 108

(B)(1) and (2), the acceptable foreign currency exchange

proceeds

thereof

had

been

duly

accounted

for

in

accordance with the rules and regulations of the Bangko

Sentral ng Pilipinas (BSP): Provided, further, That where

the

taxpayer

is engaged in zero-rated or effectively

zero-rated sale and also in taxable or exempt sale of

goods of properties or services, and the amount of

creditable input tax due or paid cannot be directly and

entirely attributed to any one of the transactions, it shall

be allocated proportionately on the basis of the volume of

sales. Provided, finally, That for a person making sales that

are zero-rated under Section 108(B) (6), the input taxes

shall be allocated ratably between his zero-rated and

non-zero-rated sales. [72]

(B) Cancellation of VAT Registration. - A person whose

registration has been cancelled due to retirement from or

cessation of business, or due to changes in or cessation of

status under Section 106(C) of this Code may, within two

(2) years from the date of cancellation, apply for the

issuance of a tax credit certificate for any unused input

tax which may be used in payment of his other internal

revenue taxes.

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