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  • Value Added Tax On Importation

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    Tracy Miranda Bognot
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    The document discusses value added tax (VAT) on importation in the Philippines. It provides exemptions for importation of personal effects like clothing and electronics if they belong to persons settling in the Philippines. The VAT is 12% of the total landed cost. For Ms. Malou Wang's imports, used items for personal use are exempt from VAT, while new expensive electronics and a sports car are subject to VAT totaling 617,339.76 Philippine pesos.

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    VALUE-ADDED-TAX-ON-IMPORTATION

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    The document discusses value added tax (VAT) on importation in the Philippines. It provides exemptions for importation of personal effects like clothing and electronics if they belong to persons settling in the Philippines. The VAT is 12% of the total landed cost. For Ms. Malou Wang's imports, used items for personal use are exempt from VAT, while new expensive electronics and a sports car are subject to VAT totaling 617,339.76 Philippine pesos.

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    26 views2 pages

    Value Added Tax On Importation

    Uploaded by

    Tracy Miranda Bognot
    The document discusses value added tax (VAT) on importation in the Philippines. It provides exemptions for importation of personal effects like clothing and electronics if they belong to persons settling in the Philippines. The VAT is 12% of the total landed cost. For Ms. Malou Wang's imports, used items for personal use are exempt from VAT, while new expensive electronics and a sports car are subject to VAT totaling 617,339.76 Philippine pesos.

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    © All Rights Reserved
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    of 2

    VALUE ADDED TAX ON IMPORTATION – consumption tax on the import of goods.

    o Exempt importation – (4 of 9) Importation of professional instruments and implements, wearing


    apparel, domestic animal and personal household effects.
    o Conditions:
     The goods belong to persons who come to settle in the Philippines
     The goods must accompany the person upon arrival or within 90 days before or after his/her
    arrival.
     There must be evidence to show that the change of residence is bona fide.
     The importation is not a vehicle, machinery, or other equipment used in the manufacture or
    merchandise of any kind in commercial quantity
    o Tax basis – 12% of total landed cost, to be paid to the Bureau of Customs (BOC) prior to the
    withdrawal of the goods from the Customs warehouse.
     Composition of landed cost:
     Dutiable value
     Customs duty
     Excise tax, if any
     Other in-land costs
    o Illustration:
     While in Dubai, Ms. Malou Wang brought with her the following which she declared as her
    personal effects:

    10 pieces of brand new iPhone X P 80, 000 each


    10 pieces of brand new IBM laptops P 50, 000 each
    5 desktop computers P 45, 000 each
    1 piece of brand new sports car $ 50, 000
    1 piece of used laptop P 30, 000
    1 piece of used iPhone 7 P 36, 000
    1 piece of used calculator P 1, 600
    Used clothes, apparel and travelling bag P 19, 000

    The following information refers to the details of the charges of the importation of the brand
    new car:
    Purchase price $ 50, 000.00
    Insurance in transit $ 500.00
    Freight $ 800.00
    Total invoice price $ 51, 300.00

    Other charges P 105, 815.00


    Per dollar exchange rate P 45.00
    Tariff rate 30%
    Excise tax rate 15%
     Required:
    o What are the exempt importations?
    o What is the imposable VAT on Importation?
     Solutions:
    o Requirement # 1:
     The used laptop, iPhone 6, calculator, clothes, and apparel are apparently
    personal effects which are past consumptions; hence, these are exempt from
    VAT on importation since they were already taxed before.
    o Requirement # 2:
     The nature and quantity of the iPhone X, IBM laptops and desktop computers is
    clearly inconsistent with the concept of personal effects. The brand new sports
    car, although for personal use, does not meet the conditions for exemption.
    (Refer to condition # 4, title bullet number 3).
     Computation for the imposable VAT on Importation:
    10 pieces of brand new iPhone X (P 80, 000 x 10) P 800, 000.00
    10 pieces of brand new IBM laptops (P 50, 000 x 10) P 500, 000.00
    5 desktop computers (P45, 000 x 5) P 225, 000.00
    1 piece of brand new sports car*** P 3, 619, 498.00
    Total amount subject to VAT on Importation P 5, 144, 498.00
    Multiply by: VAT rate 12%
    VAT on Importation P 617, 339.76

    ***Computation for the landed cost of the brand new sports car:
    Total invoice price ($ 51, 300 x P45) P 2, 308, 500.00
    Customs duty (P 2, 308, 500 x 30%) P 692, 550.00
    Other charges P 105, 815.00
    Total amount before excise tax P 3, 106, 865.00
    Plus: 10% addition to basis as fixed by law (P 3,106,865 x 10%) P 310, 686.50
    Excisable Value P 3, 417, 551.50
    Multiply by: Excise tax rate 15%
    Excise tax P 512, 663.00
    Plus: Total amount before excise tax P 3, 106, 865.00
    Total landed cost of the brand new sports car P 3, 619, 498.00

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