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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

Two VAT-registered entities enter into a barter: ParcelPro Express (a VAT-registered courier service) transfers 12 used delivery vans with a fair market value of PHP 6,000,000 to IronClad Assemblies (a VAT-registered supplier of modular loading docks) in exchange for 12 brand-new steel loading docks with a fair market value of PHP 6,000,000. No cash changes hands. (a)Identify the doctrine governing barters or exchanges between VAT-registered persons that makes the exchange a taxable sale (transactions deemed sale subject to VAT). (b)Compute the VAT due by each party on this barter, stating the tax base and rate used, and showing the arithmetic for the FMV values of PHP 6,000,000 for each side.

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Tax base is the cash equivalent actually received; since no cash is exchanged, no VAT is due. Tax base is the fair market value of the goods received; VAT rate 12% applies only when the goods are sold to customers, not in barter. Deemed sale on barter between VAT-registered persons; tax base is the fair market value of the property transferred on each side (PHP 6,000,000); VAT rate is 12%; VAT due per party PHP 720,000. Tax base equals the higher FMV among the exchanged goods; VAT rate 12%; VAT due per party PHP 720,000.

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