phBar.org (Bar Exams Forum-Philippines)

IV.

JKL Corporation is a domestic corporation engaged in the importation and sale of motor vehicles in the Philippines and is duly registered with the Subic Bay Metropolitan Authority (SBMA). In December 2007, it imported several second-hand motor vehicles from Japan and Korea, which it stores in a warehouse in Subic Bay. It sold these motor vehicles in April 2008, to persons residing in the customs territory.

a) Are the importations of motor vehicles from abroad subject to customs duties and value added taxes? Explain. (4%)

b) If they are taxable, when must the duties and taxes be paid? What are the bases for and purposes of computing customs duties and VAT? To whom must the duties and VAT be paid? Explain. (3%)

IV.a

Yes, the government in its effort to boast economic activities through domestic and foreign investment grants those enterprises registered in special economic zone, certain tax exemption on some of their business activities. Some of these grants are exemption from import duties and value added tax on acquisition of raw materials, tools and other implements necessary for their operation. This exemption privilege however is not applicable to JKL enterprise because after importing those vehicles, they were subsequently sold to persons residing in the customs territory. Exemption is available only on importations of such materials or implements that are directly or indirectly used in the productions of goods or services. Importations therefore made by JKL corporations in this case are subject to customs duties and value added taxes.

IV.b

The prices or the acquisition costs as shown on the bill of lading may serve as the bases of computing the customs duties. In case the amount does not reflect the true value of such imported vehicles, the custom officer may disregard such amount and assign the appropriate value based on reasonable assessment. As regards the basis of computing the value added tax, the amount should be based on selling price imposed by JKL Corporations to its buyers.

Customs duties must be paid upon release of said vehicles from the custom’s warehouse and should be paid to the Collector of Customs duly authorized to receive such payment. Value added tax on the other hand, must be remitted or paid to the appropriate Revenue District Office where the principal office of JKL Corporation is located.

IV. b

The basis of Customs duties is the Transaction Value while the basis of VAT is the Total Landed Cost (TLC) which includes the cost of the goods, the customs duties , freight-in and insurance, if any.

Customs duties and VAT on importations are to be paid before the vehicles are to be released by the Bureau of Customs to JKL Corp. Both customs and VAT on importations are paid to and collected by the Bureau of Customs.

Subsequent sale of the imported vehicles are again subjected to VAT (called output) and the tax may be passed on to the buyers of the vehicles. The Vat paid on importation (now called input) may be claimed as a creditable tax which effectively diminishes the amount of Vat to be paid, this time remitted and collected by the BIR.

How to calculate India Tax Credit for employees deputed to US to avoid double taxation? I have deputed to US on temporary basis and earning income in India and US. My India income is double taxed (both in India as well as in US). Can you please suggest how to calculate the India tax credit for my income in India to avoid double taxation.
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market samurai ~ marketsamurai ~ marketsamurai.com

hi stephanikaathur

please introduce yourself at the GTKY section. please create your own thread in the said section. salamat