If you are a VAT-registered business, you must add VAT to your prices and submit VAT returns regularly to the authorities. You also need to issue receipts and any proof of purchase with VAT details. This tells a customer how much VAT they are paying for a transaction, how much of their purchase is VATable sales, VAT exempted or zero-rated. It’s important information for both merchants and customers to claim that VAT back in future.
Here are showing how VAT calculation works:
1. VATable sales
Definition: The sum of product and modifier selling price that are taxable without VAT amount
Example 1 (VAT inclusive):
The selling price of Apple is P100 and it only sells to customer for P90 for exclusive promotion.
Formula to calculate the VATable sales for VAT inclusive = (Item selling price / 1+tax ratio)
So the VATable sales is equal to P80.36 which derived from 90 / 1+0.12 (tax ratio for Philippines is 0.12)
Example 2 (VAT exclusive):
The selling price of Apple is P100 and it only sells to customer for P90 for exclusive promotion.
Formula to calculate the VATable sales for VAT exclusive = Item selling price
So the VATable sales is equal to P90
2. VAT (12%) amount
Definition: Total of VAT amount charged by merchant.
Example 1 (VAT inclusive):
The selling price of Apple is P100 and it only sells to customer for P90 for exclusive promotion.
Formula to calculate the VAT amount for VAT inclusive = (Item selling price / 1+tax ratio * tax ratio)
So the VATable sales is equal to P9.64 which derived from 90 / 1+0.12 * 0.12 (tax ratio for Philippines is 0.12)
Example 2 (VAT exclusive):
The selling price of Apple is P100 and it only sells to customer for P90 for exclusive promotion.
Formula to calculate the VAT amount for VAT exclusive = (Item selling price * tax ratio)
So the VATable sales is equal to P10.80 which derived from 90 * 0.12 (tax ratio for Philippines is 0.12)
3. VAT exempt sales
Definition: Total amount of VAT exempt items
When the items marked with VAT exempted have been sold, it will contribute to the VAT exempt sales.
4. Zero-rated sales
Definition: Total amount of zero-rated tax items
When the items marked with zero-rated tax have been sold, it will contribute to the Zero-rated sales.
Here are the VAT details on the receipt, transaction and report:
1. POS payment page
2. POS payment page
3. POS receipt
4. E-receipt
5. Invoice email
6. POS transaction records
7. HQ transaction records
8. POS reports
9. HQ reports
