a) goods returned by a customer.
b) discounts.
c) allowances granted to the customer usually because of wrong/defective delivery.
Notes: VAT wise, there are strict compliance rule for "discounts" to be validly excluded from VAT
a) must be granted and indicated in the invoice at the time of sale; and
b) should not depend upon the happening of a future event
c) Sales discounts should be excluded from gross sales within the same quarter it was given.
Means, you should release VAT invoice for promotion discount. right?
2. Cost of Sales/Services
The term “cost of goods sold” includes all business expenses directly incurred to produce and bring the merchandise to their present location and use.
a) Trading or merchandising
It includes the invoice price of the goods, plus import duties and freight in transporting the goods to the place where they are actually sold, including insurance while the goods are in transit.
Notes: why labor cost is not included? Hmmm.
b) In the case of a manufacturing, “cost of goods manufactured and sold” includes all production costs, such as raw materials, direct labor, manufacturing overhead, freight cost, insurance premiums, and other costs incurred to bring the raw materials to the factory or warehouse.
c) In the case of service, “cost of services” is defined as all direct costs and expenses necessarily incurred to provide the services required by the customers and clients, including: (a) salaries and employee benefits of personnel, consultants and specialists directly rendering the service; and (b) cost of facilities directly utilized in providing the service such as depreciation or rental of equipment used and cost of supplies, except that in the case of banks, “cost of services” shall include interest expense.
3. MCIT
a) It will be applied starting the 4th year of operation. Means, for the first 3 years, you may not pay CIT if you are recording deficit. But starting 4th year, you should pay something(?) even though the excess MCIT over NCIT can be a tax credit for 3 immediately succeding taxable years.
b) The year when the business is registered with BIR is the 1st year. It's not related with each company's fiscal year. So, if you register December 31, 2018....it will be the 2nd year in 2019.
Notes: There are exceptions such as banks, insurance/finance companies.
4. Other Taxable Income
There might be other taxable income except for the main business activities such as sales of ordinary assets, interest income from affiliates. Final Tax and Capital Gain Tax paid together with exempt sales are not part of this category.
5. Optional standard deduction (OSD)
It's 40% of gross income. The taxpayer can choose OSD or itemized deduction but once OSD is chosen, it's not revocable during the taxable year applied. (1st qtr ~ 4th qtr) It doesn't require substantiation unlike itemized deductions.
Notes: In what business field, "allowable deduction" would be small?
Notes: New tax reform bill might reduce this 40% to 20%. It's not filed to Congress yet as of Jan 2018.
6. Tax Credits
a) Creditable withholding taxes (CTW) supported by certificates (BIR form 2307) issued by clients
b) Income taxes paid abroad (subject to certain conditions)
c) Excess tax credits of prior year.
7. Amendment of Income Tax Return (ITR)
You can amend or revise duly filed tax return within 3 years from filing as long as there is no ongoing examination.
Means, you should release VAT invoice for promotion discount. right?
2. Cost of Sales/Services
The term “cost of goods sold” includes all business expenses directly incurred to produce and bring the merchandise to their present location and use.
a) Trading or merchandising
It includes the invoice price of the goods, plus import duties and freight in transporting the goods to the place where they are actually sold, including insurance while the goods are in transit.
Notes: why labor cost is not included? Hmmm.
b) In the case of a manufacturing, “cost of goods manufactured and sold” includes all production costs, such as raw materials, direct labor, manufacturing overhead, freight cost, insurance premiums, and other costs incurred to bring the raw materials to the factory or warehouse.
c) In the case of service, “cost of services” is defined as all direct costs and expenses necessarily incurred to provide the services required by the customers and clients, including: (a) salaries and employee benefits of personnel, consultants and specialists directly rendering the service; and (b) cost of facilities directly utilized in providing the service such as depreciation or rental of equipment used and cost of supplies, except that in the case of banks, “cost of services” shall include interest expense.
3. MCIT
a) It will be applied starting the 4th year of operation. Means, for the first 3 years, you may not pay CIT if you are recording deficit. But starting 4th year, you should pay something(?) even though the excess MCIT over NCIT can be a tax credit for 3 immediately succeding taxable years.
b) The year when the business is registered with BIR is the 1st year. It's not related with each company's fiscal year. So, if you register December 31, 2018....it will be the 2nd year in 2019.
Notes: There are exceptions such as banks, insurance/finance companies.
4. Other Taxable Income
There might be other taxable income except for the main business activities such as sales of ordinary assets, interest income from affiliates. Final Tax and Capital Gain Tax paid together with exempt sales are not part of this category.
5. Optional standard deduction (OSD)
It's 40% of gross income. The taxpayer can choose OSD or itemized deduction but once OSD is chosen, it's not revocable during the taxable year applied. (1st qtr ~ 4th qtr) It doesn't require substantiation unlike itemized deductions.
Notes: In what business field, "allowable deduction" would be small?
Notes: New tax reform bill might reduce this 40% to 20%. It's not filed to Congress yet as of Jan 2018.
6. Tax Credits
a) Creditable withholding taxes (CTW) supported by certificates (BIR form 2307) issued by clients
b) Income taxes paid abroad (subject to certain conditions)
c) Excess tax credits of prior year.
7. Amendment of Income Tax Return (ITR)
You can amend or revise duly filed tax return within 3 years from filing as long as there is no ongoing examination.