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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

LumiHarvest, Inc., a domestic corporation, derives all of its revenue from the sale of dried mango chips in the domestic market. Its gross annual sales do not exceed the VAT registration threshold, and it has elected to be treated as a VAT-exempt person. It regularly purchases packaging materials, processing inputs, and maintenance services, all of which bear value-added tax. Which of the following statements is correct?

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A VAT-exempt transaction cannot be part of a mixed business that also makes taxable outputs, since all outputs are exempt. LumiHarvest is a VAT-exempt person; its domestic sales are VAT-exempt transactions; it cannot charge VAT on outputs nor claim input VAT on purchases; if LumiHarvest later exports dried mango chips, it would need to register for VAT to treat exports as zero-rated; once registered, it can claim input VAT on purchases used for export production and its export outputs would be zero-rated, while domestic outputs would remain exempt. LumiHarvest’s domestic sale qualifies as an exempt transaction only if the seller is VAT-exempt; in LumiHarvest’s case, the sale is not exempt. An exempt person can never switch to VAT-registered status.

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