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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

MikaTech Solutions, a VAT-registered supplier of industrial control panels, sells 25 units of UltraControl panels to Helix Construction Corp., a VAT-registered company, for PHP 4,500,000. The panels are manufactured in the Philippines and delivered to Helix’s site in Manila. The sale is in the ordinary course of MikaTech's business. The price is exclusive of delivery; MikaTech arranges and pays for delivery, charging PHP 100,000 for freight in the invoice. MikaTech also provides on-site installation by its technicians for PHP 300,000. The installation is inseparable from the sale of the panels. The buyer pays within 30 days. The transaction occurs entirely in the Philippines. Which statement best describes the VAT treatment of this transaction?

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The transaction is subject to VAT; the entire sale of goods, delivery and installation constitutes a single taxable supply. The VAT base is PHP 4,900,000 (4,500,000 goods + 100,000 freight + 300,000 installation). VAT at 12% equals PHP 588,000. MikaTech Solutions, as the seller, remits the tax. The installation is a separate service, so VAT applies only to the goods and freight (4,600,000). VAT = PHP 552,000; MikaTech remits the tax. The transaction is not subject to VAT because installation is inseparable from goods but treated as a non-taxable ancillary service. The VAT base includes goods only (4,500,000); freight and installation are exempt as delivery and installation are not part of the sale.

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