January 8, 1979 REVENUE REGULATIONS NO.01-79 SUBJECT : Regulations Governing the Taxation of Non-resident Citizens TO : All Internal Revenue Officers and Others Concerned Pursuant to the provision of Section 326 in relation to Section 4 of the National Internal Revenue Code of 1977, as amended, the following regulations revising Revenue Regulations No. 9-73 to implement the latest amendments to Section 20 of the same Code by P.D. No. 1457 are hereby promulgated. SECTION 1. Scope. — These amended regulations shall govern the manner of taxation of non-resident citizens as provided for under Section 21 of the Tax Code, as amended, and shall be known as Revenue Regulations No. 179. SECTION 2. Who are considered as nonresident citizens. — The term "non-resident citizen" means one who establishes to the satisfaction of the Commissioner of Internal Revenue the fact of his physical presence abroad with the definite intention to reside therein and shall include any Filipino who leaves the country during the taxable year as: (a) Immigrant — one who leaves the Philippines to reside abroad as an immigrant for which a foreign visa as such has been secured. (b) Permanent employee — one who leaves the Philippines to reside abroad for employment on a more or less permanent basis. (c) Contract worker — one who leaves the Philippines on account of a contract of employment which is renewed from time to time within or during the taxable year under such circumstances as to require him to be physically present abroad most of the time during the taxable year. To be considered physically present abroad most of the time during the taxable year, a contract worker must have been outside the Philippines for not less than 183 days during such taxable year. Any such Filipino shall be considered a non-resident citizen for such taxable year with respect to the income he derived from foreign sources from the date he actually departed from the Philippines. A Filipino citizen who has been previously considered as a non-resident citizen and who arrives in the Philippines at any time during the taxable year to reside therein permanently shall also be considered a non-resident citizen for the taxable year in which he arrived in the Philippines with respect to his income derived from sources abroad until the date of his arrival. SECTION 3. Proof of intention. — A Filipino citizen who leaves the Philippines to reside abroad either as an immigrant or for permanent employment or a contract worker, shall submit to the Commissioner of Internal Revenue proof of his intention of leaving the Philippines to reside permanently abroad. A returning non-resident citizen, on the other hand, must present proof of his intention to return to and reside permanently in the Philippines. Such proof of intention shall be attached to his income tax return (BIR Form No. 1701C) and may consist of the following: (a) In the case of an immigrant, photostat or xerox copy of his foreign visa. (b) In the case of one leaving for permanent employment abroad, a certificate from his employer showing the nature and duration of his employment. (c) In the case of a contract worker — (1) Certificate of the employer; or (2) Copy of the contract of employment; or (3) Other documentary evidence. (d) In the case of a returning non-resident citizen — (1) Xerox copy of his passport bearing the stamp of Philippine immigration authorities showing that he is a returning resident as distinguished from a mere Balikbayan. (2) Other documentary evidence. SECTION 4. Manner of filing returns. — Every non-resident citizen must file an income tax return covering all his income earned abroad on BIR Form No. 1701C. When husband and wife are both non-resident citizens, only one return containing their consolidated income is required to be filed on BIR Form No. 1701C. If aside from the foreign income, the non-resident citizen also derives income from Philippine sources, two separate returns should be filed, one on BIR Form No. 1701C covering the income derived from foreign sources and the other on BIR Form No. 1701 or 1701A, as the case may be, covering the income from sources within the Philippines. However, if the Philippine income is derived solely from salaries, wages, remunerations or other similar compensation for services rendered and such gross income does not exceed P2,000, if the taxpayer is single, or P3,333.33, if married or a head of the family, the non-resident citizen is exempt from filing an income tax return with respect to such income. The income tax return of non-resident citizen covering his taxable income earned abroad shall be accompanied by a copy of the income tax return filed with the national government of the foreign country of his residence as well as the evidences of tax payment. SECTION 5. Computation of income and tax. — A. On income derived from all sources outside the Philippines. — 1. What to include as gross income. — The gross income of a non-resident citizen derived from sources outside the Philippines includes all income enumerated under Section 29 of the National Internal Revenue Code, whether or not such income is exempted from income tax in the foreign country where it was derived. If the income is in foreign currency other than US dollars, it shall first be converted into US dollars at the average annual rate of exchange of the foreign currency and the US dollar for the year in which the income was earned. On the amount exceeding $20. with a dependent son. 35 years old.32 LESS: Adjustment to income (moving expenses) 60.000 $60.00 ———— TOTAL GROSS INCOME $8. .17 Income other than wages (Wife's prize in photo contest) 200.97 ———— AMOUNT REFUNDABLE (191. California.32 2. b. his income shall be computed as follows: Gross Income $8. or children are not more than twenty-one years of age. sisters.000. recognized natural.325.00 plus 3% of excess over $20.32 TAX DUE PER IRS TABLES $ 325. or $4. Juan de la Cruz. Filipino.407.347. — Beginning with the taxable year 1978. there shall be imposed on the adjusted gross income of non-resident citizen a tax computed as follows: On the amount not exceeding $6.407.00 ———— ADJUSTED GROSS INCOME SUBJECT TO TAX $4. — The term "head of family" is defined as "an unmarried man or woman with one or both parents. Salaries.814. Personal exemption of $2.00 Tax payments and credits Total Federal income tax withheld $484. 4. For U. unmarried and not gainfully employed or where such children are incapable of self-support because they are mentally or physically defective.97) ====== For Philippine income tax purposes. or one or more legitimate. etc.32 ADD: Excluded dividend income taxable under Philippine Income Tax Law 200. — The adjusted gross income is arrived at by deducting from the gross income the following: a.607.000 (b) Foreign National Income Tax paid (Attach copy of Federal Income Tax Return and evidence of payment) 325 ——— Total Deductions [add (a) & (b)] 4.65 Dividends received from qualified U. 5. or adopted children living with and dependent upon him or her for their chief support where such brothers.282. or one or more brothers or sisters.000 $340. Computation of tax. — The computation of the tax due from a non-resident citizen on income derived abroad is illustrated as follows: Mr. he filed a joint return containing the following data and claimed the optional standard deductions and used the optional tax tablets: Income: Wage.00 plus 2% of excess over $6.00 ———— Adjusted Gross Income $8. 3.00 ———— Total Gross Income $8. Tips.67 ———— Total payments and credits $516.000 if the non-resident citizen is single or a married person legally separated from his or her spouse. Computation of Adjusted Gross Income.000.S.000 if married or head of a family.30 Other payments (gasoline tax.S.000 1% On the amount exceeding $6. domestic corporation — $482.Rate of tax.32 LESS: (a) Personal Exemption as married$4.00 282. Jose and a resident of Los Angeles.) 32. Others $7. The total amount of the national income tax actually paid to the national government of the foreign country of his residence. married to Maria. Head of Family.50 Interest Income on savings deposit 110.50 less exclusion $200.000 but not exceeding $20. Federal Income Tax purposes. S. If the return and payment. the non-resident citizen may elect to pay the tax in two equal installments in which case. corporation.D. — These regulations supersede Revenue Regulations No. ANNEX "A" REPUBLIC OF THE PHILIPPINES MINISTRY OF FINANCE Manila January 15. as amended by P. 1469 in relation to Sections 4 and 326 of the National Internal Revenue Code of 1977.00). 1469.000.$200. on or before the fifteenth day of July following the close of the calendar year. Quezon City. as amended by P. 1469. — The return must be filed. regulations. "Philippine-made products" shall mean articles or products for export. if any. — The tax due on income derived by a non-resident citizen from sources within the Philippines shall be computed in the same manner as the income tax payable by resident citizens and resident aliens. these regulations are hereby promulgated. Definition of Terms. If any installment is not paid on or before the date fixed for its payment. (e) "Tax Exemption Certificate" shall mean the certificate issued by the Bureau of Internal Revenue that a registered export producer is entitled to exemption from the payment of percentage tax on its export sales.282. amended or modified accordingly. 1469. If the return is filed and payment of the tax made in the Philippines by or for the non-resident citizen. as amended. the following definitions of terms are hereby adopted: (a) "Registered Export Producer" shall have the same meaning as defined under Section 187(y) of the National Internal Revenue Code.00) x .D. SECTION 8. which are inconsistent herewith are hereby repealed. administrative orders and general circulars or portion thereof.01 ———— Amount payable $42. — For purposes of these regulations. Scope. manufactured. When and where to file.32 At 1% rate (not over $6. partnership or other entity doing business in the Philippines shall. SECTION 3. Philippines. the dollar amount of the tax to be converted into pesos at the rate of exchange prescribed by Revenue Memorandum Circular No. the whole amount of the tax unpaid becomes due and payable together with the delinquency penalties. SECTION 1. as amended by P. — These regulations shall govern the registration of export producers and traders with the Philippine Export Council and the availment of tax benefits for indirect exports under Presidential Decree No. (d) For purposes of registration. — Any person.. SECTION 2. are sent by mail. the first installment shall be paid at the time the return is filed and the second installment. in a refund. A tax credit certificate shall be non-transferable and it may be used by the registered export producer against all internal revenue tax liabilities but in no case may it be used so as to result. bank draft or manager's check payable to the Commissioner of Internal Revenue. 1469. must be paid on or before April 15 following the year for which the return is being filed with the Philippine Embassy or Office of the Consulate General nearest to the taxpayer's place of residence or direct to the Commissioner of Internal Revenue. 21-78 for internal revenue tax purposes. (c) "Export Sales" shall have the same meaning as defined under Section 187(aa) of the National Internal Revenue Code. SECTION 6. Repealing Clause. before registration. Effectivity. produced or processed by registered export producers. satisfy the Philippine Export Council that: (a) He or it is actually engaged in the manufacture. On income derived from sources within the Philippines.======= Tax Due: Adjusted Gross Income $4.D. Philippine Consulate General or the Commissioner of Internal Revenue on or before April 15. When the tax due is in excess of two hundred dollars (U. 1469.82 ———— B. if any. 1469. in effect. 9-73 dated November 26. All existing rules. The payment should be made in the form of an international money order. 1973. (f) "Tax Credit Certificate" shall mean the certificate issued by the Bureau of Internal Revenue evidencing credits against internal revenue taxes extended to registered export producers under Presidential Decree No. SECTION 7. (b) He or it is engaged or will engage in buying Philippine-made products from a registered export producer and subsequently exporting the same. production or processing of articles or products in commercial quantity for export which meet the quality standards set by the Bureau of Standards for such articles or products. — These regulations shall take effect immediately and shall apply to income earned beginning January 1. Pursuant to the provisions of Section 6 of Presidential Decree No. 1469 SUBJECT : REGISTRATION OF EXPORT PRODUCERS AND TRADERS WITH THE PHILIPPINE EXPORT COUNCIL AND AVAILMENT OF TAX BENEFITS FOR INDIRECT EXPORTS UNDER PRESIDENTIAL DECREE NO. the same should be mailed on such a date as to reach the Philippine Embassy. and the tax due. (b) "Registered Export Trader" shall be understood as defined under Section 187(z) of the National Internal Revenue Code. .D. the tax may be paid in Philippine currency. Qualification for Registration. 1979 RULES AND REGULATIONS IMPLEMENTING P. BIR Bldg. 1978. Diliman. together with the copies of shipping or other documents evidencing actual exportation. 2. The foregoing documents shall be certified true copies of the original documents. make factual determinations in relation thereto and submit its recommendations to the Council. selling and other administrative costs. Copies of invoices. other registered export producers. the registered export producer must submit to the Bureau of Internal Revenue the following documents: 1. This is without prejudice to the automatic registration prescribed in P. SECTION 5. only the registered export producer can claim the tax credit for taxes paid on raw materials. Other papers as may reasonably be required by the Philippine Export Council and/or its delegate. 1. Cancellation of Registration. A registered export producer can avail of the tax credit in the following situations: A. — (a) Processing and Evaluation. Availment of Tax Benefits. the Council may. the seller (1st registered export producer) is the one entitled to claim the tax credit for taxes paid on raw materials. Audited financial statements of the applicant. foreign tourists and travelers. All conditions and requirements for registration prescribed by the Council and/or its delegate shall be taken into account by the Bureau of Internal Revenue in the determination of tax benefits for indirect exports. SECTION 6. part. Export market projections showing expected revenues. 5. Illustrative examples on the manner of availment of incentives are shown in Illustration Nos. (b) Filing. — The Certificate of Registration shall be issued by the Philippine Export Council. Sale by a registered export producer to another registered export producer: 1) Where the tax is billed as a separate item in the sales invoice. Failure to comply within said period shall be construed as abandonment of the application. — In processing of applications for registration. B. the purchaser (2nd registered export producer) can claim tax credit for the taxes paid on raw materials. 4. (d) Supporting documents. in case of corporation. SECTION 8. Sales invoices or other documents from suppliers or sellers of raw materials. (e) Incomplete Papers. the Philippine Export Council and/or its delegate shall require the applicant to submit all required papers not filed with the application within a period to be prescribed by the Philippine Export Council or its delegate. (c) All applications shall be in the prescribed form and shall be subject to the payment of filing fees. or by the Managing Partners in case of a partnership. provided the articles or products sold were actually exported on or before the 20th day of the month following the calendar quarter when the sale took place. accessory or other article forming part of the finished product exported.SECTION 4. — Any Certificate of Registration issued under this Decree may be revoked/cancelled by the Philippine Export Council on its own initiative or upon recommendation of its designated government agency on the following grounds: . landing certificates. the following documents shall be submitted to the Bureau of Internal Revenue: 1. and 2. 3. designate any competent government agency to evaluate the applications. bills of lading. In order to avail of the tax credit benefit pursuant to Section 202(f). SECTION 7. A photostatic copy of the certificate of registration issued by the Philippine Export Council. 2) Where the tax is not billed as a separate item in the sales invoice. second paragraph of the Tax Code. inward letters of credit. 2. — The tax benefits for indirect exports provided in Section 3 of P. parts or components utilized in the manufacture or production of finished articles and/or products sold to a registered export trader and/or foreign tourists and travelers. — Upon filing of the application. parts or components purchased and utilized in the manufacture or production of its export articles.D. In order to substantiate the claim for tax exemption. — Applications for registration shall be filed with the Philippine Export Council or its delegate. 1584.D. which must be filed within one (1) year from date of the actual exportation of the product and/or article. otherwise only such financial statements during the period it has been in operation. registered exports traders. and other commercial documents evidencing the actual exportation of products and/or articles sold. viz: profit and loss statements and balance sheets for the two immediately preceding years if applicant has been in operation for such period. Resolution of the Board of Directors authorizing the filing of the application. in its sound discretion. 3 and 4 of Annex "A". or cdtai 2. Sale by registered export producer to a registered export trader and/or foreign tourists and travelers: Whether or not the sales tax is billed as a separate item in the sales invoice. Copies of the Certificate shall be furnished the delegate of the Philippine Export Council and the Bureau of Internal Revenue. Application for Registration. (a) Tax Exemption — The Bureau of Internal Revenue shall issue a Certificate of Tax Exemption covering the sales of registered export producers to: 1. — The documents to be submitted by the applicant in support of its application are: 1. parts or components utilized in the manufacture or production of finished articles and/or products together with sales taxes paid on said articles or products sold to another registered export producer. or 3. 1469 shall be available to registered export producers who are registered with the Council. (b) Tax Credit — The Bureau of Internal Revenue shall issue appropriate tax credit certificates only to export producers registered with the Council. Certificate of Registration. A written application for said tax credit. and 2. In the case of juridical entities Articles of Incorporation or Partnership or any other document evidencing the legal existence of the applicant. 1.00 wherein the P10. a registered export producer.000. # IN THE BOOKS OF "C" Purchases P2. Repealing Clause.000. currency.00 ========= (2) Recommended Accounting Entries: IN THE BOOKS OF "B" Purchases P80.000.00 To record sales of manufactured articles to "C".00 –––––––––– Total P88. SECTION 11. The sale between them and the subsequent actual exportation by "C" of his manufactured products both occurred within the quarter when the sale took place.00 –––––––––– Total P110. ANNEX "B" ILLUSTRATIVE EXAMPLES SITUATION NO. Illustration No. — Where the tax is Billed as a Separate Item in the Sales Invoice.000. "C" also utilized these finished articles he purchased from "B" as raw materials or input in the manufacture of his finished articles which he exported on March 20. (1) Manner of Invoicing: (a) Invoicing by "A" to "B": Selling Price P80.000. for P110. "B" utilized these raw materials in the manufacture of his finished articles which he thereafter sold to "C". # (3) Determination of Sales Tax Liability: The sale made by "B" to "C" is not subject to sales tax. — SALE BY REGISTERED EXPORT PRODUCER TO ANOTHER REGISTERED EXPORT PRODUCER.00 Sales P100. Publication and Effectivity. "B". # Cash/Accounts Receivable — P110.000.00 sales tax was billed as a separate item in the sales invoice.000. 1979. that an export producer registered under this Decree.000.00 Cash/Accts.000.000.000. a domestic manufacturer.(a) (b) (c) Violation of the provisions of Presidential Decree 1469 or of these rules and regulations.00 10% Sales Tax 10. immigration national security and economy. P88.000.00 Deferred Tax Credit P8.00 ========= (b) Invoicing by "B" to "C": Selling Price P100. shall not concurrently avail of the tax benefits accruing to its registered activity under this Decree and other laws.00 Deferred Tax Credit 8.000.00 Sales Tax Payable 10.00 Miscellaneous Income P2. or Failure to meet the standards set by the Bureau of Standards on their products for export.000.000. IN THE BOOKS OF "C " Purchases P100. FACTS: On February 5. which is entitled to benefits under other laws.000.000. however. Since the sales tax was billed as a separate item in the sales invoice issued by "B" to "C". — Registered export producers and export traders with the Board of Investments shall be automatically registered with the Council: Provided. Payable P110.000.00 To record purchase of raw materials from "A".00 Deferred Tax Credit 10.000. another registered export producer. (A) Sale by a Registered Export Producer to Another Registered Export Producer Considered "Export Sales" During the Quarter When the Sale was Consummated.000. — All rules and regulations inconsistent herewith shall be deemed revoked or amended accordingly.000.000.00 To record purchase of raw materials from "B". or Violation of any law relating to taxation.00 was separately billed in the sales invoice. — These rules and regulations shall take effect fifteen (15) days after its publication in a newspaper of general circulation.00 . Payable P88.00 10% Sales Tax 8.000. SECTION 9. purchased from "A". SECTION 10. the following are the recommended accounting entries: IN THE BOOKS OF "B" Sales Tax Payable P10.00 To take up recognition of income and to offset sales tax payable against deferred tax credit as a result of exemption from sales tax.00 Cash/Accts. 1.00 worth of raw materials of which the sales tax in the amount of P8. 1979. Applicability to Existing Enterprises. 000. (B) Sale by a Registered Export Producer to Another Registered Export Producer Considered "Domestic Sales" During the Quarter When the Sale was Consummated.00 –––––––––– Net Sales Tax Due & Payable P2. 1979. The sales tax billed separately by "B" to "C" was not remitted to the Bureau of Internal Revenue for the sale was exempt from sales tax. and "C" can charge the P2.000. FACTS: Similar Facts as in Illustration No.000. # IN THE BOOKS OF "C" NONE .000.00 Deferred Tax Credit P8.000.000. in effect.00 To take up availment of Tax Credit in the quarter when the sales was considered as export sales.00 Deferred Tax Credit P10.000.00 Cash/Accounts Payable P110.00 To record purchases from "B".00 To take up remittance of final sales tax and application of tax credit. (A) Similar facts as in Illustration No.000. IN THE BOOKS OF "C" Accts. Receivable.00 Sales P110.00 Tax Credit Receivable 8. In this particular situation.000.000.000. "B" can no longer claim tax credit for he has already been reimbursed by "C". 1(A) except that the sale made by "B" to "C" occurred on February 5. C P2. IN THE BOOKS OF "B" Cash/Accounts Receivable P110. 1979).000.000.Tax Credit Receivable 8. The following are the recommended accounting entries: IN THE BOOKS OF "B" Tax Credit Receivable — BIR P8. 1979 and "export sales" only for the quarter ending June 30.000. 1(A) but the tax is not billed as a separate item in the sales invoice made by "B" to "C".00 Accts.00 Deferred Tax Credit P10.00 Cash P2.00 taxes previously paid on raw materials because he has.00 ========= Sales Tax Due P10.000. been reimbursed by "C" for the P8.00 Deferred Tax Credit 8.00 tax credit representing the actual amount collected by the government from "A".00 To offset sales tax payable against deferred tax credit and to set up account payable to "C" representing excess amount collected from "C" as a result of exemption from sales tax. as follows: Selling Price P100. The sales tax liability by "B" for the quarter ending March 31. 1979.00 To take up sales of manufactured articles to "C".000.000. the following are the recommended accounting entries: IN THE BOOKS OF "B" Sales Tax Payable P10. The sale between "B" and "C" will be considered as "Domestic sales" for the quarter ending March 31.000.00 To set up tax credit receivable from BIR and accounts receivable from "B" for tax previously paid on raw materials used.000.00 which he should recognize as miscellaneous income or as a liability to "C". # IN THE BOOKS OF "C" Purchases P110. — Where the tax is not billed as a separate item in the sales invoice.000. "B" P2.00 To set up tax credit receivable from BIR and to charge purchases for the unrecovered amount paid on the raw materials used in the finished products sold.000.00 plus the additional P2.000. 1979 while the actual exportation of the finished articles by "C" happened on May 5.000.000.00 Deferred Tax Credit P10. "C" can claim only P8. The sales tax liability of "B" was extinguished by actual exportation of the finished articles by "C" before the due date for the payment of the sales tax by "B" (on or before April 20.00 Less: Tax Credit 8. Payable.000. ILLUSTRATION NO 2.00 collected from him by "B" to purchases or set up accounts receivable from "B". On the other hand.00 Deferred Tax Credit 8.000. # IN THE BOOKS OF "C" Tax Credit Receivable — BIR P10.000.00 ========= In the books of accounts of "B" and "C". 1979 is computed.000. # or the following alternative entries: IN THE BOOKS OF "B" Sales Tax Payable P10. "B" can no longer claim tax credit for P8. In this situation.00 To set up receivable from BIR for the availment of tax credit. 000.00 Cash/Accounts Payable P88.00 Deferred Tax Credit P8.00 Deferred Tax Credit P8.000.00 Sales Tax Payable 10. (A) FACTS: X.000.000.000.00 ========= Tax Due P11.00 10% Sales Tax 10.00 To take up recognition of income and to offset sales tax payable against deferred tax credit as a result of exemption from sales tax.000. The manner of invoicing the sale by "X" was as follows: Selling Price P100.000. # Accts.00 Deferred Tax Credit P11.000.000.00 Deferred Tax Credit 8. # Tax Credit Receivable P11.00 Cash 3. 1979 and who subsequently exported the same on March 20. 2(A) except that actual exportation by "C" was made after the 20th day of the month following the calendar quarter when the sale took place between "B" and "C". a registered export producer.000.00 ========= # IN THE BOOKS OF "B" Deferred Tax Credit P3.000.000. 2 — SALE BY REGISTERED EXPORT PRODUCER TO A REGISTERED EXPORT TRADER. (B) Similar facts as in Illustration No. Recommended Accounting Entries: IN THE BOOKS OF "X" Purchases P80.00 ========= Sales Tax Due EXEMPT Recommended Accounting Entries: Sales Tax Payable P10. # OR THE FOLLOWING ALTERNATIVE ENTRIES: Sales Tax Expense P11. # IN THE BOOKS OF "C" NONE SITUATION NO.00 Miscellaneous Income P11.00 To take up payment of the final sales tax during the quarter when sale was considered domestic sale.000.00 To payment of final sales tax during the quarter when sale was considered domestic sale.00 Cash P3.00 –––––––––– TOTAL P110.00 Misc. Selling Price P110.000.000.000.000. only "B" can claim P8. Tax Credit Receivable P11.000. on February 5.00 To record availment of tax credit in the quarter when the sale was considered export sales.When the tax is not billed separately and the transaction is considered exempt during the quarter.000.00 To take up sales made.00 Purchase of raw materials from "X".000. Determination of sales tax liability by "B" and the accounting entries that should be made in the books of "B" and "C". purchased P88.00 Sales P100.00 ========= The sale of "X" to "Z" and the subsequent actual exportation by "Z" occurred within the same quarter and the sales tax was billed as a separate item in the sales invoice of "X". Determination of the sales tax liability of "X": Selling Price P100. 1979. — Where the tax is billed as a separate item in the sales invoice.000. Receivable/Cash P110.000.00 worth of raw materials of which P8. # IN THE BOOKS OF "Z" Purchases P110.00 To set up availment of tax credit when sale was considered as export sale.00 taxes paid on raw materials which he can apply against all other internal revenue tax liabilities.000. .000.00 LESS: Tax Credit 8.000. a registered export trader.00 To take up purchases of raw materials. Income 2.000.000.00 tax was billed as a separate item in the sales invoice which he utilized in the manufacture or production of his finished articles he sold to "Z".000. ILLUSTRATION NO.000.000.00 Cash/Accounts Payable P110. 3.00 –––––––––– Net Sales Tax Due and Payable P3.000. 000. Determination of Sales Tax Liability of "X": Selling Price P100.00 ========= Recommended Accounting Entries: IN THE BOOKS OF "X" Deferred Tax Credit P3.00 Cash 3. # IN THE BOOKS OF "Z" NONE OR THE FOLLOWING ALTERNATIVE ENTRIES : Sales Tax Expense P11. 3(A) except that the sales tax was not billed as a separate item in the sales invoice and the sale of "X" to "Z" and actual exportation by "Z" was made after the 20th day of the month following the preceding calendar quarter when the sale between "X" and ''Z" took place and therefore considered as "domestic sale".00 Cash P3.000. Since the sales tax was billed as a separate item in the invoice and that the actual exportation by "Z" took place after the 20th day of the month following the close of the preceding calendar quarter. Determination of sales tax liability of "X": Selling Price P110.000.000.00 To record sales of manufactured products to "Z".000.00 –––––––––– Net Sales Tax Due and Payable P2.00 Deferred Tax Credit P11.00 To take up remittance of final sales tax in the quarter when sale was considered as domestic sale. 4 — Where the tax is not billed as a separate item in the sales invoice.00 To set up availment of tax credit in the quarter when the sale was considered as export sale.000.) # IN THE BOOKS OF "Z" NONE (B) Similar facts as in Illustration No.000.00 Deferred Tax Credit P8.00 Miscellaneous Income P10.000.000.00 Sales P110.000.00 ========= Recommended Accounting Entries: IN THE BOOKS OF "X" Sales Tax Payable P10.00 Deferred Tax Credit P8.00 LESS: Tax Credit 8.00 To take up payment of final sales tax during the quarter when the sale was considered.000.00 Cash 2.000.000.00 Deferred Tax Credit P8.00 ========= Accounting Entries: IN THE BOOKS OF "X" Cash/Accounts Receivable P110.000.000. the sale of "X" to "Z" shall be considered "domestic sale" during the said quarter. 3(A) except that the exportation was made after the 20th day of the month following the close of the calendar quarter when the sale between "X" and "Z" took place. Tax Credit Receivable P8. # Tax Credit Receivable P11.000. (A) Similar facts as in Illustration No.000.00 LESS: Tax Credit 8.000.00 ========= Sales Tax Due P10. 3(A) except that the sales tax was not billed as a separate item in the invoice and the sale of "X" to "Z".IN THE BOOKS OF "Z" NONE (B) Similar facts as in Illustration No.000. IN THE BOOKS OF "Z" NONE ILLUSTRATION NO.00 To set up availment of tax credit (when sales was considered as domestic sale. Tax Credit Receivable P10. # . and the actual exportation of the finished articles by "Z" occurred within the same quarter: Selling Price P110.00 ========= Sales Tax Due P11.000.000.00 –––––––––– NET SALES TAX DUE AND PAYABLE P3.000.000.000.00 To set up availment of tax credit in the quarter when the sale was considered export sales.000.00 To take up payment of final tax during the quarter when the sale was considered export sales. Tax Credit Receivable P11.000.000.00 To take up availment of tax credit in the quarter when the sale was considered export sales.00 Miscellaneous Income P11. .