Taxumo understands the importance of being precise and complete when filling out financial documents, especially when it involves Value Added Tax (VAT) in the Philippines. We are always asked by online sellers, professionals, MSMEs, etc. on how to write on a VAT Receipt. This guide will help you on how to create VAT receipts right, complete with a step-by-step computation example.
Understanding VAT Receipts
VAT receipts are more than just proof of transaction; they are a comprehensive representation of the sale, including the Value Added Tax. In the Philippine setting, VAT receipts serve as a vital document for both buyer and seller in accounting for the VAT paid and received (Output and Input VAT).
Essential Details on the Receipts
Each VAT receipt should contain:
- The seller’s and buyer’s name, address, and TIN (if VAT-registered). Actually, even if they are not VAT registered, it’s still good practice to get these information.
- A unique sequential receipt number.
- The date of the transaction.
- A detailed description of the goods or services.
- The total amount charged, with a clear indication of the VAT amount.
To be able to use these invoices for taxation purposes, it should be printed by a BIR accredited printer.
Sample Computation on the VAT Receipts
Let’s consider a total sales amount (VAT inclusive) of ₱1,200.00. Here’s how to break it down:
- Amount Net of VAT: To isolate the Vatable sales amount, divide the total sales by 1.12 (for the 12% VAT rate):
₱1,200.00 / 1.12 = ₱1,071.43
- Compute the VAT: Calculate the VAT by multiplying the net amount by 0.12:
₱1,071.43 * 0.12 = ₱128.57
- Withholding Tax Calculation: If a withholding tax applies, multiply the net amount by the withholding rate (e.g., 2%):
₱1,071.43 * 0.02 = ₱21.43
- Total Amount Due: Deduct the withholding tax from the total sales to determine the total amount due:
₱1,200.00 – ₱21.43 = ₱1,178.57
Step 4: Presenting the Computation on the Receipt
Your VAT receipt should present these calculations clearly. Following the example above, it should list:
- Total Sales (VAT Inclusive): ₱1,200.00
- Less: VAT: ₱128.57
- Amount Net of VAT: ₱1,071.43
- Less: Withholding Tax: ₱21.43
- Total Amount Due: ₱1,178.57
Following the BIR Regulations
Ensure that your VAT receipts are BIR-compliant. Use official receipt forms printed by BIR-accredited printers and follow the BIR’s invoicing requirements strictly.
Record Keeping
Retain a copy of all VAT receipts issued for at least five years to support BIR audits and inquiries. Accurate and organized record-keeping reflects the integrity of your business practices and eases the process of financial review.
By following this Taxumo guide, you can ensure that your VAT receipts are correctly written, computed, and aligned with the Philippine tax system’s standards. This attention to detail not only helps in clear financial reporting but also demonstrates your business’s commitment to regulatory compliance.