VAT Ruling No. 038-88

March 2, 1988 VAT RULING NO. 038-88 108-037-038-88 Mr. Ernesto B. Baello, Jr. 62 N. Ramirez Street Sta. Mesa Heights, Quezon City Dear Sir : In reply to your query on the correct computation of the VAT, please be informed of the following method: Tax Tax Due Credit Cost of goods from wholesaler (including VAT) 110.00 Less: VAT (input tax) 10.00 100.00 Add: Mark-up 5.50 Partial total 105.50 Add: 10% VAT (output tax) 10.55 P10.00 P.55 Selling Price to Consumer P116.05 ====== The selling price to the consumer is further computed as follows: Cost of goods from wholesaler P100.00 10% VAT passed on by wholesaler 10.00 Add mark-up 5.50 10% VAT on mark-up .55 Total selling price to consumer P116.05 ====== Based on the above computation, you will only remit P.55 to the government which is the difference between the output tax of P10.55 and the input tax of P10.00. Moreover, in order to avoid confusion on the part of your customer, it is advised that the VAT be included in the selling price instead of billing it separately. Very truly yours, VICTOR A. DEOFERIO, JR. Deputy Commissioner